FTSE tumbles 5 per cent amid global financial fears

Mr Osborne said the fall in the FTSE 100 index of nearly five per cent, its lowest level in more than two and a half years, showed that Britain is not immune to problems in the world markets.

The Chancellor said the UK’s openness means that it feels the effects of downturns in Asia and the eurozone.

Speaking during a visit to Helsinki, Mr Osborne said: “Everyone’s concerned about the situation in Asian financial markets.

“I would take it as a reminder that we are not immune from what happens in the world. It’s all the more reason why countries like Britain and indeed Finland need to get their own house in order.

“You don’t know where the next crisis is coming from, you don’t know where the next shock is going to come from in the world.”

“Britain is a very open economy, we’re probably the most open of the world’s largest economies. And so we are affected by what happens; whether it’s problems in the eurozone, problems in Asian financial markets.”

Investors were reacting to the latest stock market rout in China overnight. The Shanghai composite, down heavily in recent weeks, slipped by more than eight per cent and has now lost all its gains for 2015 - despite attempts by Beijing to arrest the slump.

Markets in Europe took it as a cue for another bout of selling, before a steep opening fall of more than six per cent on Wall Street markets added to the pressure.