The FTSE100 fell 2% today after the chair of the US Federal Reserve hinted its version of quantitative easing would end early.
The IMF says plans to reduce government debt are holding the economy back. It's the most forthright criticism yet of Osborne's austerity.
The outgoing Governor of the Bank of England today delivered some good news for "the first time since the financial crisis began" in 2007.
George Osborne told business leaders tonight the Government's economic plan "is working".
Speaking at the CBI annual dinner at Grosvenor House, the Chancellor said, "We will stick with our approach”.
Shadow Treasury minister Chris Leslie said George Osborne is "in total denial about the failure of his economic plan" ahead of the Chancellor's speech to business leaders.
Mr Leslie said: "He has now delivered the slowest recovery for 100 years, falling living standards and rising unemployment. And borrowing is set to be £245 billion more than planned to pay for the costs of this economic failure.
"If we're to have a strong and sustained recovery, and catch up all the ground we have lost over the last three years, we need urgent action to kickstart our economy now and reforms to strengthen it for the long term.
"It's time George Osborne listened before any more long-term damage is done", he added.
Chancellor George Osborne is expected to tell business leaders that the Government is prepared to stick to its economic course, saying, "Now is not the time to lose our nerve ... Our plan is working".
As he addresses the CBI annual dinner at Grosvenor House tonight, Mr Osborne will say that spending more to rejuvenate the UK's fortunes is "patently ludicrous" and would set the recovery back
He is also set to rubbish Labour's calls for a temporary VAT cut, claiming the figures do not "stack up".
The Chancellor is expected to say: "My message to the business community and to the country is this - we have a clear economic plan.
"Our plan is working. Now is not the time to lose our nerve. Let's not listen to those who would take us back to square one.
"Let's carry on doing what is right for Britain, let's see this through".
The outgoing Bank of England Governor Sir Mervyn King has given his most upbeat signal yet that the UK will recover from the financial crisis.
During his last forecast as governor, Sir Mervyn predicted growth will be a "little stronger" than previously hoped, setting the UK on course for a "modest and sustained" recovery.
He said the economy should expand by 0.5% in the second quarter of this year, while inflation will not surge as much as feared.
But he warned it will be a "weak and uneven" recovery.
Outgoing Bank of England Governor Sir Mervyn King has said "the most durable lesson of the last 20 years is the overriding importance of basing monetary policy on serious economy analysis rather than politics or market mystique".
He added: "After 89 press conferences, 82 under the banner of the inflation report., I've had my say, now it's over to the next generation to have theirs"
Outgoing Bank of England Governor Sir Mervyn King has said there is a "welcome change in the economic outlook" for the UK and projected a "modest and sustained" recovery.
As he delivered his final inflation report, he predicted: "Growth to be a little stronger and inflation to be a little weaker than we expected three months ago.
"That's the first time I've been able to say that since before the financial crisis", he added.
"But this is no time to be complacent. We must press on to ensure a recovery and to bring down unemployment" ,he cautioned.
The Bank of England has raised hopes over the economy by predicting a "modest and sustained" recovery.
But outgoing Governor Sir Mervyn King warned that inflation will remain stubbornly high until at least the end of 2015.
IHS Global Insight economist Howard Archer said commodity price falls have "diluted upside risks". That could mean inflation peaking at about 3% during the summer, he said.
– Howard Archer
Outgoing Governor Sir Mervyn King could actually have a rare parting present of being able to deliver a report that does not contain higher consumer price inflation forecasts or lower GDP (gross domestic product) growth projections.
Indeed, Sir Mervyn may even be able to present a marginal downward revision to the consumer price forecasts although having higher growth forecasts may be pushing his luck.