Chancellor George Osborne has insisted that tax reductions have to be part of a properly-costed programme, and defended his decision not to lower them further.

Mr Osborne, who is due to tell the Conservative conference today that he remains determined to stick to tough deficit reduction targets, told Today presenter Sarah Montague that he would like to cut taxes more if he could, but in the current circumstances it was not sensible.

"There are things we've been able to do, like cut the corporate tax rate, cut rates for businesses," he explained.

"We've been able to take over a million low income people out of income tax and actually deliver an income tax cut for over 20 million people this year. So, we are able to do these things, but only as part of a properly-costed plan where you find the savings.

"In the end, you cannot run your country on the back of an enormous deficit. You've got to pay your way in the world."

And he said that a resolution of the crisis in the eurozone would provide a shot in the arm for the British economy.

Mr Osborne called on countries in the single currency to increase the firepower of the bail-out fund to help rescue struggling countries such as Greece.

"The single biggest boost for the British economy that can take place this autumn is nothing I can announce, it is the resolution of the euro crisis."

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