The chancellor has defended his Budget statement - dismissing claims that the economy is at risk from government and consumer borrowing.

Gordon Brown denied that he was planning post-election tax cuts - insisting his plans are "perfectly affordable".

The upbeat assessment came as Brown faced tough questions on his borrowing and future tax plans.

Brown said schools and hospitals were being funded by "rising growth" and not increases in tax rates.

"More people are in work… and are contributing to the public services we enjoy," he said.

"It is a result of a prudent approach to the public finances that we are in this position."

Hamas assets frozen

The chancellor opened his evidence session on Wednesday by announcing a new Treasury move to combat terrorism.

Brown said he had ordered that the assets of or on behalf of five senior members of Hamas be frozen.

"The UK has been a leading country in implementing UN freezes of terrorist assets and taking the appropriate domestic action," he said.

"I can announce that I have instructed the Bank of England, under the Terrorism Order, to add further names to the list of those whose assets are to be frozen, including two aliases of a Kurdish terrorist group and five senior members of Hamas."

Investment

Quizzed by the Commons Treasury committee he said a "massive investment programme is moving ahead" in the public services.

He said the Budget deficit being operated by the Treasury was "perfectly financeable" given economic performance.

Brown added that there were still significant cost savings to be made in the operation government.

He said that "£1.6 billion in procurement costs" had been saved by Peter Gershon’s Office of Government commerce.

In a wide ranging evidence session Brown also pledged to end "stop-go in road building" through "a continuous programme of investment".

On the balance of trade situation, Brown said exports and imports were now in a "sustainable position".

"Exports are rising faster and that is to the benefit of the British economy," he added.

The chancellor, however, served notice on "unscrupulous lenders" who are fuelling the consumer credit boom.

He said some individuals may have "over borrowed" but stressed that total mortgage payments as a percentage of income was nearly half of the figure seen in the early 1990s.

But Brown denied the overall level of consumer debt was jeopardizing the economy.

"It is not true that the economy is in a parlous position as a result of this," he said.

Upbeat

Ahead of this afternoon's appearance before MPs, Brown addressed the parliamentary Labour Party where he won applause from backbenchers.

Pointing to investment in schools, hospitals and science he said a dividing line had been drawn between Labour and the Conservatives.

Since last week's Budget Brown has received a broadly positive response to his proposals.

However the chancellor has been warned that it may prove difficult to achieve the efficiency gains planned.

That has prompted the Tories to claim the chancellor is preparing for an aggressive round of tax increases following the next general election.