US Treasury Secretary Tim Geithner said he was "very impressed" by the steps taken by the Coalition Government to deal with the UK's record deficit.
Speaking to the BBC, the US Treasury Secretary praised his UK counterpart's "remarkable" strategy to restore sustainability.
Although the problems "were not created by this government," Mr Geithner said, George Osborne had "locked his coalition and the government into a set of reforms that are very good."
Asked whether cutting the deficit would damage growth, Mr Geithner said, "I don't see much risk of that at the moment".
The Treasury Secretary was critical of the "deeply costly strategy" of 'light touch' regulation in place before the financial crisis, which he said was "designed consciously to pull financial activity from New York, Frankfurt and Paris to London."
His comments were in contrast to Shadow Chancellor Ed Balls who said when he was City Minister in 2006, "nothing should be done to put at risk a light-touch, risk-based regulatory regime"