George Osborne has faced down fierce pressure to reverse police cuts in the wake of this week’s riots, warning that any deviation from his deficit reduction plan could “plunge Britain into the financial whirlpool of a sovereign debt crisis”.

The chancellor insisted Britain was a haven in “the most dangerous time for the global economy since 2008”, but told MPs in an emergency Commons session that it would be a disaster to relax £81bn of spending cuts.

“Let me make it clear not only to the House of Commons but to the whole world: ours is an absolutely unwavering commitment to fiscal responsibility and deficit reduction,” he said.

Mr Osborne’s comments came after David Cameron faced more than two hours of Commons questions about the riots that hit London and other English cities this week, with many MPs demanding the scrapping of plans to reduce police budgets by 20 per cent.

Mr Cameron insisted the cuts were “totally achievable without any reductions in visible policing”, although he said he had put the army on standby to provide support to the police if there was a future outbreak of serious disorder.

The prime minister was accused of “complacency” by Jack Straw, former Labour home secretary, while some on the Tory right – including London mayor Boris Johnson – have also called for a reversal of police cuts one year ahead of the Olympic Games in the capital.

Mr Osborne has insisted there can be no reopening of the tough spending cuts agreed last autumn, amid signs that some overseas investors were concerned this week that the unrest would weaken the government’s commitment to austerity.

In response to questions from clients, economists at JPMorgan said in a note that they did not expect any changes to policy following the unrest to affect overall fiscal targets.

Mr Osborne said that in the absence of any fiscal room for manoeuvre it was vital to have a cross-party onslaught on the “forces of stagnation” that he claimed were blocking supply-side reforms.

The chancellor said he would challenge “vested interests, pressure groups and . . . even some trade unions” as he draws up a package of growth-related reforms to be published in the autumn.

Mr Osborne wants to implement planning reforms, loosen employment laws for small companies and to sweep away regulation, but government officials believe the drive is being impeded by environmental pressure groups, unions and some civil servants inside Whitehall.

The chancellor also felt emboldened enough to offer advice to leaders in the eurozone, perceived as the source of the biggest threat to Britain’s economic stability.

He urged leaders in the euro area to consider “solutions such as eurobonds or other forms of guarantees” as well as improved economic governance, arguing that the “remorseless logic” of monetary union was greater fiscal integration.

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