The UK economy risks a “lost decade” of stagnation unless the government tempers spending cuts with a drive for jobs and growth, warns Shadow chancellor Ed Balls.
His comments come after official figures revealed that the UK economy has slipped into recession, contracting by 0.2% in the three months ended March 31, after negative growth of 0.3% in the previous quarter, the fourth quarter of 2011.
Balls told the Observer in an interview that the government had failed to secure recovery, to get unemployment down and to get the deficit under control.
One thing that “frustrates” him is how Chancellor George Osborne has been “arrogantly” saying for a year now, “ 'No my plan will work – you are wrong', and we are a year on and it is now too late".
The shadow chancellor said he wants to "talk this through" with the government to highlight the "big choices" the UK is facing to "get out of this very deep hole". Moreover, he wants the chancellor to join him in a live TV debate.
Balls warns that if the chancellor does not change direction, the UK economy could dip in and out of recession for "a very long time", as Japan's did from the early 1990s.
However, Prime Minister David Cameron has insisted he has no plans of shelving spending cuts as doing so would disrupt the prevalent low interest rates in the country that are “absolutely vital for recovery”.
Cameron said he had to "convince people we're taking the right long-term decisions to deal with problems in our country that have existed for many years".
He added, "The figures this week were extremely disappointing, but I tell you what we absolutely mustn't do and that is throwing away our plans for dealing with the debt, dealing with the deficit.”