George Osborne Warns Of Tax Increases

The Chancellor says the UK will have to live "within its means" as he says fiscal predictions are being "borne out by events".

Tax rises and spending cuts will be needed within months to deal with economic challenges following the vote to leave the EU, George Osborne has warned.

The Chancellor said predictions about the impact on public finances "have started to be borne out by events" - including falls in the value of the pound and markets.

Speaking on BBC Radio 4's Today programme, he said he stood by his warning about a harsh emergency budget.

He said: "We are absolutely going to have to provide fiscal security to people - in other words we are going to have to show the country and the world that the country can live within its means."

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Mr Osborne was asked if that meant tax rises and spending cuts and replied: "Yes, absolutely."

He rejected claims he had been too harsh with warnings about the potential implications of Brexit, adding: "I would say that the concerns those like myself, who argued passionately and full throttled articulated, have been started to be borne out by events."

He said that any decision on tax rises would have to be made under a new prime minister.

The Chancellor accepted his front of stage role in the Remain campaignruled out his chances of running for the leadership of the Conservative Party.

Writing in The Times on Tuesday, he said: "I believed in this cause and fought hard for it. So it is clear that while I completely accept the result, I am not the person to provide the unity my party needs at this time."

The FTSE 100 rose 2% at the start of trading on Tuesday - moving into positive territory for the first time since the referendum result on Friday.

Sterling also made some recovery after falling to a 31-year low following the referendum outcome.

Prime Minister David Cameron will attend an emergency meeting of EU leaders in Brussels later on Tuesday, where he is expected to urge leaders to take a "constructive" approach to negotiations over a new relationship with the UK.