We are are going through the most severe global economic crisis since the Great Depression... I believe the public rightly expected that, given the scale of this crisis, the people they elected to serve them had to intervene.

None of this has been cost-free. The unprecedented nature of the global economic crisis, and the action that was needed, has led to Government borrowing rising sharply across the world. The cost of supporting the financial system, as well as helping people and businesses, has come on top of a fall in tax receipts because of the slowdown in economic activity.

But I believe that the cost of stepping back and letting the recession take its course would have been far higher. There are some who claim, for their own ends, that the growth in borrowing and debt is somehow a peculiarly British phenomenon. This is a view which can be dismissed by looking around the world.

That is why, at the G20 meeting last weekend, countries agreed that once recovery is firmly established, we must all rebuild our fiscal strength. Cutting support now, as some are demanding, would run the real risk of choking off the recovery even before it started, and prolonging the global downturn.

But in the medium-term we need to live within our means, not to do so would be equally irresponsible and damage our country's future.

The Prime Minister and I will never risk the fiscal sustainability of our economy. It is why in the Pre-Budget Report, and then in this year's Budget, I set out plans to half the deficit over four years once the recession is over. That includes tax rises with the biggest burden falling on those who can most afford it.

It's not just about public spending, some are against our difficult decisions on tax. I cannot accept that cutting inheritance tax for the few is a greater priority than getting people into work or investing in public services.

It is also necessary to see slower growth in public spending in the coming years. Every country faces similar pressures. Setting priorities inevitably means tough choices. It will require us to examine what Government can and should do, while recognising that there will always be a vital role for the state.

Taken from a speech by the Chancellor of the Exchequer in Cardiff yesterday