Chancellor George Osborne has warned Britain still faces "painful cuts" in its efforts to achieve a stable economy.
In a speech to be given in Birmingham, the Chancellor will say the UK needs to face up to 'hard truths' about the state of the economy, despite recent encouraging data.
He will argue more austerity measures to cut spending are needed to reduce the tax burden on workers and firms.
The country is borrowing around £100bn per year, although Osborne (pictured) will state the deficit is down by a third.
"We have got to make more cuts. That is why 2014 is the year of hard truths - the year when Britain faces a choice.
"Do we say 'the worst is over, back we go to our bad habits of borrowing and spending and living beyond our means and let the next generation pay the bill'?
"Or do we say to ourselves, 'yes, because of our plan things are getting better - but there is still a long way to go and there are big, underlying problems in our economy'?"
Osborne outlined plans to cut an additional £60bn over the coming four years and said he wanted to ask Parliament to vote on them. His plans include finding £17bn in savings this year, £20bn in the next and more than £25bn across the two years after.
Osborne will also ask Parliament to vote on a new charter for budget responsibility that will commit the government to reducing debt in the future. It will ask the government to not "spend more when borrowing falls" and make it "use surpluses in good years to reduce debt".
A substantial amount of spending will be clawed back from the welfare budget, which will face a further £12bn in cuts in the first two years of next Parliament. Measures will include cutting housing benefit for under-25s and restricting council housing for those earning over £65,000 a year, Osborne suggested.
Osborne's comments indicate austerity is set to continue despite positive business and manufacturing outlooks.
Three recent business confidence surveys have suggested firms are optimistic about their ability to expand and hire more staff, and a Lloyds Bank survey indicated business confidence is the highest since 1994.
Similarly, manufacturing companies are expecting a positive outlook for 2014 according to professional manufacturing body EEF.
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