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One of Chancellor George Osborne’s senior advisers on economic policy has been captured on video smoking crack cocaine in a drugs den.

Prof Douglas McWilliams, who last year ­estimated we would all be £165 a year better off by the election, is seen inhaling it through a glass tube at a flat in North London.

The executive chairman of influential City think-tank the Centre for Economic and Business Research then slumps dazed on a sofa after repeatedly smoking on the makeshift crack pipe involving a miniature Martell Cognac bottle.

Red-faced and slurring his speech, he later told the dealer he had “too much” and that he had spent the day on a binge.

Two rocks of the deadly drug can clearly been seen on a table beside the dazed professor. The grainy footage, seen by the Sunday Mirror, will heap embarrassment on the Chancellor and raise serious ­questions about his choice of adviser.

A source said: “Last Sunday McWilliams turned up at the den around 10pm and was there about a hour and a half. There were two rocks of the drugs. He smoked it over a table and then sat there all spaced out.

“He was in a suit and started talking about the economy and all that for about 20 minutes. He kept mentioning someone famous he worked with but didn’t make much sense. He was asked if he wanted any more and said ‘I’ve had too much’.”

(Image: Matt Sprake)

The revelation comes just two weeks before the launch of McWilliams’ highly acclaimed new book Flat White Economy which tells how London has swapped the City’s champagne and supercars lifestyle for bicycles and boho flats. Last April he bragged that his forecast of how much better off everyone would be gave the Chancellor “rather more scope” for cutting taxes in the spring budget.

McWilliams, 63, said: “The Government, and especially George Osborne, have credibility in the City partly because both Ed Miliband and Ed Balls do not.”

Now his own credibility lies in tatters.

(Image: PA)

Our source said McWilliams had been a regular at crack dens in Hornsey, North London for several months. He said: “He is out of control and a real addict. He’s a regular at the address. He also goes to another house nearby. He just turns up.”

McWilliams specialises in economic forecasting and analysis. He advises 25 of the FTSE companies, including top retailers, legal firms and accountants.

A former Professor of Commerce at Gresham College, McWilliams is described on the Centre for Economic and Business Research (CEBR) website as “one of the most widely quoted economists”. He set up the think-tank in 1992 having previously served as Chief Economic Adviser to the CBI.

McWilliams, married to wife Ianthe for 35 years, has also advised London Mayor Boris Johnson on housing and is a regular on Twitter.

On Christmas Day he tweeted about an Office for National Statistics decision to include earnings from drugs and the sex trade in economy figures. He wrote: “Prostitution and illegal drugs help UK overtake France in global wealth league.”

Yesterday morning at his five-storey London mansion he said: “I’m not going to comment. You are not going to get a story from me.”