6a00d83451b31c69e201287632130d970c-500wi George Osborne has written for The Telegraph today and has warned that "2010 will be the year when the world's focus shifts from the debts in our banks to the enormous debts being run up by governments".

He notes that rating agencies have downgraded Greece and that Britain is the most vulnerable country of any of the top-rated nations in the world.  He lists a number of global banks that reacted negatively to Alistair Darling's PBR, including Barclays who said that "the UK's triple-A sovereign credit rating and the currency are likely to remain vulnerable".

Mr Osborne spells out what would happen to Britain if international investors lose confidence:

"The people of Greece know what happens when the world loses confidence in your ability to pay your bills. It's costing them an additional 2.5% on the interest rates they are paying to borrow. Before Sweden started dealing with their debts in the Nineties, it faced a market penalty of 4.5%. Britain is borrowing more than Greece, and more than Sweden was. All that is saving us at the moment is the expectation that a future Conservative government will get a grip. If Labour get in again, that won't happen. If Britain follows Greece, the interest bill on a £150,000 mortgage could go up by more than £200 a month. The cost of credit for businesses would go up, too, and more jobs would be lost. And we'd be paying billions more in taxes each year just to service the national debt."

Mr Osborne is right to warn Britain that Labour has no plan to cut Britain's deficit. It is also true that he is yet to announce a deficit reduction plan of his own. We have had some austerity measures from the Tories but only a fraction of what is going to be necessary. Every day Tories are in the press attacking the very few measures that Labour has taken. In the FT today, for example, William Hague is criticising David Miliband's cutbacks to Britain's Foreign Embassies.

In the last two years the Tories have given every impression that they would like the IMF to be called in. The IMF would force British politicians to make the kind of spending cuts that they seem reluctant to make themselves. Ruth Lea has even suggested that the first act of a Tory government should be to call in the IMF and get it to make the budget cuts necessary to reverse Gordon Brown's scorched earth policy. That would be a terrible day for Britain and our international reputation would not recover for a generation.

6a00d83451b31c69e20128765eaa5d970c-800wi I still hope that George Osborne has a secret plan for dealing with Labour's debts. The problem with keeping it secret until after the next election is that he won't have a mandate for what he will need to do and that will make the trade unions' £25m campaign against him even more powerful. Without a manifesto mandate, structural reforms to public services may also be hard to get through the Lords, where the Tories will be a minority government.

Time is running out for the Tories to say how – in broad terms – they'll repair the public finances. The draft Tory manifesto to be published on 4th January may give us more of an idea of (1) the planned spending cuts and (2) the Tories' growth agenda.

Tim Montgomerie