Finance minister George Osborne says Britain will have to raise taxes and cut spending to deal with the economic challenge posed after Britons voted to leave the European Union.
"We are absolutely going to have to provide fiscal security to people, we are going to have to show the country and the world that the government can live within its means," he told BBC radio on Tuesday.
The chancellor said it was key that Britain provided fiscal stability in the wake of the decision to exit the EU which has seen sterling plunge and markets tumble.
"We are in a prolonged period of economic adjustment in the UK, we are adjusting to life outside the EU and it will not be as economically rosy as life inside the EU," he said.
"I think we can provide a clear plan."
Asked if that plan meant tax rises and spending cuts, he said: "Yes, absolutely. But that decision will come under a new prime minister - it's obviously not possible while the Conservative Party is having a leadership contest."
Osborne accepted that his prominent role in the Remain campaign has ended his chances of a move to Number 10 and conceded that the pro-EU push "did not get it all right".
He appeared to hint that he could support Theresa May - who backed Remain but did not play a prominent role in the campaign.
Asked if someone from the pro-EU side could win, Osborne told BBC Radio 4: "Absolutely.
"I am not backing any candidate at the moment but of course I was full-throttled in arguing for remaining in the EU and because half my party wanted to leave the EU I don't think I can be the person who can bring the party together."
He said the best PM would be "the candidate who is able now to articulate the clearest, crispest version of what relationship we are seeking - which in my view involves the best possible terms of trade for services and goods."
Asked if he would continue to serve as a minister after David Cameron goes, Osborne said it was "absolutely a decision for the next prime minister".
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