London Mayor Boris Johnson has said the government must "junk talk of austerity" in order to boost confidence in the British economy.
In a speech to business leaders in Davos, he said the government must "recognise that the single biggest inhibitor of demand is lack of confidence".
He added: "If only some of the people in this room would invest some of the cash in their balance sheets we would see that confidence rewarded in a virtuous circle.
"This morning's news demonstrates why the Chancellor is pursuing measures now that will boost confidence, further stimulate demand and bring growth, through investment in housing, transport and infrastructure."
Business leaders at the World Economic Forum cautioned against complacency amid optimism that the eurozone is emerging from its crisis.
The Chancellor blames GDP figures on the crisis he inherited, and troubles abroad. As criticism mounts, his position becomes more difficult.
Unusually frank words for the government from one of the City's top economists on today's dismal GDP figures.