Britain must prepare for rises in interest rates, George Osborne has said, as he warned that 2016 will be a "mission critical" year for the UK economy.
In a high-profile economic speech in Cardiff, the Chancellor warned against complacency about the strength of the recovery at a time when Britain faces a "dangerous cocktail" of instability and threats ranging from slowdown in China and unrest in the Middle East to volatility in oil prices.
And he said some economists were warning of the danger of "secular stagnation", which sees extended periods of moribund growth caused by a combination of permanently low interest rates, high savings and weak business investment.
Speaking to BBC Radio 4's Today programme ahead of the speech, Mr Osborne stressed that the decision on when to raise the base interest rate from the historic low of 0.5% where it has remained since 2009 was a matter for the Bank of England and it would be "wholly inappropriate" for him to seek to influence the timing of such a move.
But he made clear that borrowers should be prepared for more expensive lending, describing the US Federal Reserve's rate hike last month as "the beginning of the exit from the very, very low interest rates and ultra-loose monetary policy that was put in place during the crash".
And he added: "Of course there will come a point where that happens in Britain - a decision made by our independent central bank ... We have got to be ready."
Speaking in Cardiff, Mr Osborne said: "One of the biggest monthly bills that many people pay is their mortgage and an important source of income for people is their savings, so it's no wonder that people are starting to talk about what a rise in interest rates might mean for us all.
"Inevitably, with the US Federal Reserve having made their decision to raise rates last month, there is a discussion of how and when we begin to move out of a world of ultra-low rates.
"Let's be clear - high interest rates are a sign of a stronger economy. The job of government is to make sure we've got in place the policies to measure overall levels of indebtedness among families while backing savings too."
In a swipe at Labour, Mr Osborne said that the greatest threat to the UK economic recovery was people believing that the job of securing the economy was done and the Government can start loosening its purse-strings and scrap planned cuts in spending.
"The biggest risk is that people think that it's 'job done'," said the Chancellor. " I want to issue this warning: unless we finish the job of fixing the public finances, to get Britain back into the black by finally spending less than we borrow, all of the progress we have made together could still easily be reversed."
Mr Osborne said: "The question for the whole United Kingdom is this: are we going to see through the economic plan that is delivering growth at home and security from risks abroad?
"For I worry about a creeping complacency in the national debate about our economy. A sense that the hard work at home is complete and that we're immune from the risks abroad. A sense we can let up, and the good economic news will just keep rolling in.
"To the politicians peddling those views, I have a very clear warning today. Last year was the worst for global growth since the crash and this year opens with a dangerous cocktail of new threats from around the world. For Britain, the only antidote to that is confronting complacency and delivering the plan that we've set out.
"Anyone who thinks it's mission accomplished with the British economy is making a grave mistake.
"2016 is the year when we can get down to work and make the lasting changes that Britain so badly needs, or it will be the year we look back at as the beginning of the decline. This year quite simply the economy is mission critical and we have to finish the job."
Mr Osborne's words stood in stark contrast to the optimistic message on the economy in November's Autumn Statement, when he announced that the nation's books were healthier than expected to the tune of £27 billion.
Shadow chancellor John McDonnell said: "This Chancellor has mixed his own cocktail of rising consumer debt, an over-reliance on borrowing from overseas, with a lack of sustained investment, while failing to support manufacturing, and topping it all off with lighter regulations for the banks. The problem is that the rest of us taxpayers will be the ones left with the hangover.
"Labour has consistently warned that George Osborne has to wake up and stop being complacent about the warning signs that the global economy could be slowing, but instead he has chosen to play political games with fiscal targets that would simply tie his hands."
Liberal Democrat leader Tim Farron said: "Osborne's excessive and aggressive cuts are a danger in themselves, he risks throwing out all the hard work by the Liberal Democrats in the coalition to stabilise the economy and rebuild the nation's finances.
"Osborne talks of the importance of economic stability yet his Government is the one risking everything through their lack of clarity on our future in the EU."
CBI director general Carolyn Fairbairn said Mr Osborne was right to warn there was no room for complacency.
"Increasing global uncertainty is contributing to the UK's lacklustre trade performance and while low commodity prices have provided a net gain for businesses here, those with a stake in the North Sea have been hit hard," she said.
"That's why it is more vital than ever that UK businesses are supported to grow, compete and prosper. Firms want relief from the building cumulative burden of Government policy, including the apprenticeship levy, national living wage, an out-of-date business rates system and the administrative challenge of pensions enrolment."
Lee Hopley, chief economist at manufacturers' organisation EEF, said: " The Chancellor's recognition that it's far from job done on rebuilding the economy is spot on, however industry wants to see how Government strategy for driving balanced growth is going to be delivered."
James Sproule, chief economist at the Institute of Directors, said: " With turmoil on the stock markets, interest rates still at extraordinary lows and various surveys painting a less than rosy - albeit more realistic - outlook for the developing world, the UK must be prepared for all eventualities. First and foremost, that means a continued focus on eradicating the deficit."