Osborne under fire days before economic figures are published

Crucial economic data showing the UK’s gross domestic product (GDP) will be revealed on Thursday and experts are warning it could be a close-run result after a volatile start to 2013 due to snowstorms in January and March and pressure in the construction sector.

The Chancellor is rumoured to be considering extending the Funding for Lending scheme (FLS) by a year in a bid to help small businesses recover. Reports suggest he could make an announcement this week.

But it comes after Fitch became the second ratings agency to strip Britain of its prized AAA rating on Friday, citing a weaker economic outlook and worse-than-expected progress on cutting debt levels.

The cut to AA+ rating came after the incoming Bank of England governor Mark Carney also sparked renewed fears by branding the UK a “crisis economy” alongside stricken eurozone countries and Japan.

The IMF has also slashed UK growth forecasts from one per cent to 0.7 per cent for 2013 and 2014’s projection from 1.9 per cent to 1.5 per cent. It said the private sector was being hampered by a lack of credit and economic uncertainty.

Former Chancellor Alistair Darling highlighted the latest ratings downgrade, the IMF’s comments and the recent Treasury Select Committee’s criticism of housing policy as three major blows to Mr Osborne’s policies in the space of just one week.

He said: “The big question is, ‘how long does the present Government simply lumber on simply hoping something will turn up?’.”

David Riley, managing director of Fitch, said Britain’s “economic recovery has been very weak, almost non-existent”. But he added the Chancellor was “caught between a rock and a hard place” and any move to reject austerity could deter the markets.