Recovery will be choppy - Osborne
George Osborne has admitted that Britain's economic recovery will be "choppy", but insisted there is light at the end of the tunnel.
The Chancellor said there are grounds for "cautious optimism" over the country's prospects, despite figures showing CPI inflation still above target at 3.1%.
But he also warned the situation could deteriorate quickly if the Government goes into "denial" over the scale of its deficit, and does not follow through on tough spending curbs.
"Here in Britain we can start to be cautiously optimistic about the economic situation," he said.
"GDP growth in the second quarter surpassed expectations at 1.1%, with all but 0.2% of that coming from the private sector.
"Employment is growing at the fastest pace for over a decade, confounding predictions that the economy cannot generate private sector jobs.
"Manufacturing is picking up and exports are recovering thanks to increasing global demand.
"As the Bank of England confirmed, this is consistent with the kind of gradual recovery forecast by the Office for Budget Responsibility at the time of the Budget.
"The much-needed rebalancing of our indebted economy - away from government and towards the private sector, away from consumption and towards business demand, away from imports and towards exports - is beginning."
Caution must be exercised however, he said, as inflation was proving more persistent than expected. He added that recovery was likely to be "choppy".
Mr Osborne said "early signs" the Government's "determined approach" to tackle the deficit was working. He said he wasn't complacent the job was "done" or that the risks had "gone away".