The UK is facing a continued squeeze after George Osborne announced “substantial" savings in public spending in his 2014 Autumn Statement.
Meanwhile, borrowing will be £91.3bn this year - higher than the forecast £87 billion.
He said: "Now there are those who say we should cut even faster, and those who say we should cut more slowly. But we’ve got the pace right – as clearly demonstrated by the fact that our economy is growing faster than almost any other."
He said part of the underspend money would be put into the NHS.
Mr Osborne also announced plans to freeze Universal Credit work allowances for a further year, cutting tax credits when overpayments are certain, and stopping unemployment benefits for migrants with “no prospect of work”.
"Total welfare spending is now set to be £1 billion a year lower than forecast at the Budget and will go on falling as a share of our GDP.
"And as I’ve made clear I believe we need to freeze working age benefits for two years, saving billions more. Decisions to control public spending are never easy. But the impact on people’s lives when economic stability is lost is far, far greater. And I’ve always believed we should be straight about what’s required to restore stability and what’s then required to stay on course."
The Chancellor said the British economy is forecast to grow by three per cent. He said Britain’s economy has grown 2.5 times faster than Germany and seven times faster than France.
He declared that Britain is due to be back “living within its means”, claiming borrowing is falling and the deficit has been reduced.
He said Britain will be “out of the red and into the black” by 2019 for the first time in a generation – making it “a country that inspires confidence around the world because it seeks to live within its means”.
The Chancellor said: “Mr Speaker I do not hide from the House that in the coming years there are going to have to be very substantial savings in public spending.
“And as I’ve said before, we’re going to have to go on controlling spending after those years if we want to have a surplus and keep it."
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