George Osborne has said he will focus "110%" on pulling the UK economy out of recession in the wake of a warning from the Bank of England that there would be zero growth in 2012.
Speaking on Wednesday afternoon the chancellor admitted that the forecast was "disappointing" but said the government now had the opportunity to "give its 110% attention and effort and energy" to create growth.
The UK’s economic growth forecast for 2012 has been slashed by the Bank to zero from 0.8% in its May estimate, as the eurozone crisis continues to blight Britain's ailing economy.
The Bank's governor, Sir Mervyn King, said the underlying picture is that output has been at best “broadly flat” over the past two years and has “continually disappointed” expectations of a recovery.
Osborne indicated that now the House of Lords Reform Bill had been dropped he would use the free parliamentary time to legislate on the economy
"Now we've got to have the undivided attention of the government to do everything possible to get the economy moving," he said.
Speaking prior to the Bank's announcement this morning David Cameron said the coalition was working hard to fix the economy.
"Frankly the House of Lords Bill now going means that instead of wrangling about that for months in the House of Commons and House of Lords we can focus on the number one issue which is the economy," he said.
However Labour's shadow chief secretary to the Treasury, Rachel Reeves, said the slashing of growth forecasts showed the need for a Plan B.
"The chancellor’s policies aren’t only causing short term pain, but long-term damage to our economy too. And despite the crisis in the eurozone Britain is just one of two G20 countries in a double-dip recession," she said.
"We urgently need a change of course on fiscal policy from David Cameron and George Osborne to boost the jobs and growth we need to get the deficit down.”
Reeves also said that next quarter's growth figures would be artificially boosted by the Olympics as any gain from the Games was "short term" and was not a "long term strategy".