The Institute of Economic Affairs called for public spending to be slashed to help fund tax cuts for households and businesses.
The think-tank's director Mark Littlewood said: "The last Labour administration increased spending by over 60%. This Government will reduce spending by less than 5%.
"To pretend that this is bold, tough or decisive is pitiful. In the absence of economic growth, this means that George Osborne has left no room for vitally needed tax cuts.
"He needs to reach for the chainsaw on public spending and stop telling us how brave he is for wielding a tiny set of nail clippers."
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