Ed Balls: 'Coalition's economic credibility in tatters'
The government's "economic credibility is in tatters" following the Autumn Statement, Ed Balls has said.
Mr Balls said poor growth figures showed George Osborne's economic strategy had failed and the UK was "falling behind in the global race".
Borrowing, national debt and the deficit had all been revised up, the shadow chancellor said.
The chancellor said borrowing and the deficit were falling and accused Labour of wanting to "borrow even more".
During the statement, George Osborne revealed he had been forced to extend economic austerity measures to 2018 - and he will miss his own target for reducing the national debt.
Mr Osborne had said debt would start falling as a proportion of GDP by 2015-16 - the year of the next general election.
But he has been forced to delay that target by a year due to the worse than expected state of the economy, which is now expected to shrink this year by 0.1% according to the Office for Budget Responsibility (OBR).
He announced a fresh benefits squeeze and a raid on the pensions of the wealthy.
Labour's shadow chancellor Ed Balls accused Mr Osborne of breaking his own rules on falling debt on which his credibility depended.
"Today after two and a half years we can see, and people can feel in the country, the true scale of this government's economic failure," Mr Balls told MPs.'Longest double-dip'
"Our economy this year is contracting, the chancellor has confirmed government borrowing is revised up this year, next year and every year."
What is the Autumn Statement?
- One of the two major statements the chancellor has to make to Parliament every year
- Since 1997 the main Budget - which contains the bulk of tax, benefit and duty changes - has been in the spring before the start of the tax year in April
- The second statement has tended to focus on updating forecasts for government finances
- Over the past few years this distinction has become blurred, with the Autumn Statement becoming more of a mini Budget
- Under the last Labour government it was called the pre-Budget report
The deficit had been revised up and national debt was rising, Mr Balls said.
He claimed it was "the longest double-dip recession since the Second World War now followed by the slowest recovery in the last 100 years".
"The chancellor's fiscal strategy has been completely derailed.
"The defined purpose of the government, the cornerstone of the coalition, the one test they set themselves - to balance the books and get the debt falling by 2015 - is now in tatters," he said.
The chancellor's decision to accelerate spending cuts and raise VAT had "depressed confidence" and "choked off our recovery", Mr Balls argued.
He told the Commons that people already struggling to make ends meet were paying the price, while millionaires got a tax cut next April, when the top rate of income tax will be reduced from 50p to 45p.
He said the average family with children on £20,000 a year would be "worse off" - even with an increase in the personal tax allowance in April 2014.
And he claimed Mr Osborne's plan to raise £1bn from pension tax relief on the well-off raised less than £1.6bn given away in Mr Osborne's first budget on the same reliefs.
However, the shadow chancellor did welcome the government's decision to scrap a 3p per litre rise in fuel duty planned for January.
Responding the Mr Balls, the chancellor said: "His whole policy was about claiming that borrowing was going up, the deficit was going up, that's not what the OBR forecasts show.
"His prescription is to borrow even more. He complains about debt, he wants to put debt up. It is completely hopeless."