But by pursuing spending cuts he is at risk of sending the UK into recession again, as the stalling private sector cannot do enough to make up for job losses in the public sector, he added.
Unemployment data released on Wednesday showed the jobless rate had hit its highest in 17 years at 8.1%, according to the Office for National Statistics.
Nida Ali, economic adviser to the Ernst & Young ITEM Club, said: "The extent of job losses is alarming. The public sector is clearly on a massive purge and the current environment of weak growth and a very uncertain outlook implies that private sector companies are being forced to delay recruitment or worse."
For this reason Carrick believes the spending cuts designed to cut public sector borrowing are the wrong path for the government to take.
He looked at growth projections under three different scenarios: Plan A – continued austerity, Plan B – a change of tack to boost growth, and Plan C – if crisis strikes.
Under Plan A GDP growth will remain close to 0% through 2012 and 2013, while under Plan B it will rise to sit around 2%. If a crisis strikes he is unsure of what will happen to growth figures as they will depend largely on how the government reacts.
Carrick said a multiplier effect would take hold if the government increased spending, meaning that every £1bn the government contributed would be boosted by £0.5bn as public sector workers spend their wages in the private sector.
"The government does not share this benign interpretation of the benefits of increased government spending. Instead it fears that should it stop tightening fiscal policy, the economy would face a financial crisis similar to that currently engulfing southern Europe," Carrick added.
The main premise for this theory from Osborne is that the rating agencies would downgrade the UK’s debt if the government was not seen to be tackling the budget deficit.
But Carrick argued the UK is in danger of being put on a negative review by the agencies over the next few years anyway, as muted growth will prevent the chancellor from reducing borrowing to the extent they desire.
