George Osborne warns of further cuts as 'storm clouds' gather

Chancellor says he will address gloomy economic outlook in budget and 'this country can only afford what it can afford'

George Osborne has warned he may have to impose bigger than expected cuts to public spending towards the end of the current parliament as the "storm clouds" in the global economy hit economic growth.

In a move to prepare the ground for a sharp deterioration in the public finances in the budget next month, the chancellor said the recent fall in nominal GDP numbers showed the British economy was smaller than expected.

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