George Osborne has promised there will be no let-up in the government's austerity plans when he delivers his budget on Wednesday 20 March.
The chancellor said retaining the confidence of the international markets had to be the priority if Britain was to avoid the kind of debt crisis afflicting European economies such as Greece, Spain, Italy and most recently Cyprus, where a tax on savings has been levied on all bank account holders.
"That is an example of what happens if you don't show the world you can pay your way," said Osborne. "We have to go on in this budget confronting the very difficult problems that Britain has - difficult problems in a difficult world situation, as we are seeing in Cyprus today."
Osborne positioned himself squarely behind hard-working, "aspirational" families, while promising measures to safeguard provisions for the young and elderly.
"We have to help those who aspire to work hard and get on, and that's what I'll be doing in my budget," he said.
"We've had a very difficult situation where banks are still weak after the financial crisis, where the rest of the world has problems and where frankly for a decade or more Britain did not connect itself to the fast-growing parts of the world, and was overly exposed to exports to Europe."
Osborne said he will fast-track pensions and social care reforms in tomorrow's budget, bringing forward the single-tier pension of around £144 to 2016 to prevent working mothers being penalised for taking time off work to raise children.
The government will also cap social care costs in 2016, one year earlier than previously planned, capping the amount pensioners must pay for nursing homes at £72,000 instead of £75,000, Osborne confirmed.
He said the reforms would provide a "huge boost for people who want to save for their retirement".
Osborne said: "I want this budget to back the people who want to work hard and get on, to back the people who aspire to own their own home and start their own business, who aspire to a better retirement and pension. These are the things we will support, and these are the people we will support.
"We want to help the people who want to do better for themselves, who want to leave something for their children, who want to have a better life and aspire to something better, because they are the wealth creators, and because when we get them energised we get the economy energised."
However, he said further spending cuts were unavoidable, and described the choices he faced as "the most difficult situation anyone doing my job as chancellor of the exchequer has ever had to face".
"We are going to have to take more difficult decisions on public spending, and I'm going to set out the envelope of further savings required from departments from 2015," he said,
Rejecting proposals from shadow chancellor Ed Balls to kick-start growth by cutting VAT and income tax for those on small or middle incomes, Osborne said there was no alternative but to make the painful decisions required to reduce Britain's budget deficit.
"It would be easy for me to say, you know what, let's cut taxes. Ed Balls has been going through the tax system saying he'll cut it. But that would be like giving the keys back to the people who crashed the car. It would be a disaster."