Mr Osborne, who promised hope for an "aspiration nation" in his fourth budget to the Commons, told ITV1's Daybreak that he "wanted to be straight with the nation about the problems we face".
Chancellor George Osborne has defended his Budget, saying the Government had to tackle the nation's economic problems, which "could be a lot worse".
Referring to the current crisis in Cyprus, he said: "It's a difficult situation, but it could be a lot worse. You only have to watch your news bulletins to see other countries, not far from here, who have not confronted their problems and who are worried about getting money out of the bank.
"It's a difficult situation. It's a difficult neighbourhood.
"We have made a lot of mistakes as a country, over many years, building up these debts. But my determination is not to run away but to confront them head on."
Mr Osborne put his strongest emphasis on measures to encourage jobs, home-ownership and small businesses.
He brought a planned increase in income tax thresholds to £10,000 forward to 2014, which Tory aides said meant that everyone who paid the 10p tax rate under Labour will next year be taken out of the tax altogether.
Shadow chancellor Ed Balls said only the rich were better off following Mr Osborne's Budget.
He said: "He told us two years ago he would get the economy growing, get rising living standards and get the deficit down.
"Borrowing is up, the national debt is rising, the economy is absolutely flat and everybody in our country is worse off year by year, apart from the rich. It's not working."