George Osborne (pic: PA) George Osborne (pic: PA)

DELUDED Chancellor George Osborne yesterday hailed nine months of economic stagnation as "positive news" for Britain.

Damning new figures revealed that the UK economy – battered by Mr Osborne's austerity programme of savage cuts and brutal tax rises – has expanded by a feeble 0.2% since last September.

Yet the Chancellor insisted: "The positive news is that the British economy is continuing to grow and is creating jobs.

"And it is positive news too at a time of real international instability that we are a safe haven in the storm."

A series of lame excuses – including the Japanese tsunami, the Royal Wedding and April's hot weather – were also trotted out to justify the lacklustre economic performance.

Shadow Chancellor Ed Balls branded Mr Osborne "breathtakingly complacent" and accused him of being "in total denial". Mr Balls, who challenged the Chancellor to a televised debate, added: "Families, pensioners and businesses can feel that tax rises and spending cuts which go too far and too fast are hurting, but it's clear that they aren't working."

New figures showed Gross Domestic Product, a measure of the nation's wealth, rose by 0.2% in the past three months.

That is just half of what the Government's independent economic watchdog had predicted.

It is also a major slowdown on the first quarter of the year, when the economy grew by 0.5%, cancelling out a shock 0.5% contraction in the last quarter of 2010.

Manufacturing, which Mr Osborne has pledged to support, actually fell by 0.3%. The Government's Office for National Statistics, which compiles the figures, claimed that growth would have been 0.7% if it wasn't for a series of "one-off events", including next year's Olympics. Sales of tickets for the 2012 Games will not be counted in the official figures until the event takes place next summer.

But Dr John Philpott, of the Chartered Institute of Personnel and Development, warned: "We must be careful not to attach undue weight to excuses about preliminary statistical measurement or the special 'one-off factors' highlighted by the ONS. It's becoming increasingly clear the Government was far too optimistic last year when it set course on a very rapid path to fiscal deficit reduction."

TUC leader Brendan Barber added: "It's hurting, but it isn't working. Ministers told us that deep, rapid cuts would get the economy back on course and leave the private sector room to grow. But the treatment has turned out to be worse than the disease."

Mr Osborne is facing mounting pressure to come up with alternative plans to stimulate growth.

Tories are demanding tax cuts while Lib Dem Business Secretary Vince Cable yesterday repeated his call for the Bank of England to start printing more money to give the economy a lift.

But Mr Osborne said there was no plan B. He added: "Our economy is stable because this Government has taken the difficult decisions to get to grips with Britain's debts."

It also emerged yesterday that more than half of British households are more worried about their personal finances than they were last year.

Some 56% of respondents to a ComRes survey for ITV News at Ten spoke of rising financial concerns, compared with 43% last October.

3 Barack Obama's Democrats and their Republican rivals were last night locked in a stalemate over how to deal with the £9trillion US debt. IMF chief Christine Lagarde said failure to reach an agreement would have serious consequences for the global economy.

Voice of the Mirror: Page 8