Budget in 35 days as Labour accused of 'fiddling' economic figures (with video)

Mr Osborne claimed support from the Treasury and the Bank of England for pushing ahead with cuts this year – rather than waiting, as Labour had argued – saying that failing to act quickly would be "disastrous" for the economy as he announced he will hold his Budget on June 22.

A new watchdog – the Office of Budget Responsibility, headed by economist Sir Alan Budd – will take over the job of making economic forecasts and has begun work on an independent audit of the public books to inform next month's Budget. It will be responsible for setting the economic growth and government borrowing forecasts on which the Budget calculations are based, rather than the Chancellor.

Accusing Labour of "fiddling" the figures, Mr Osborne said: "We need to fix the Budget to fit the figures, not fix the figures to fit the Budget."

His criticisms drew an angry retort from outgoing chancellor Alistair Darling, who said the attempt to blame Labour was "straight out of Yes Minister".

Trade union leaders also condemned the speedy cuts – warning they would put the "fragile" recovery from recession at risk and accusing Ministers of "fiscal Fascism".

Meanwhile Mr Osborne was forced to defend plans to sharply raise capital gains tax (CGT) on non-business assets amid criticism from a former cabinet Minister who advised the Tory opposition on tax reform.

Lord Forsyth said increasing the rate to 50 per cent would have a "very devastating effect" on people such as those who bought buy-to-let properties to fund their retirement.