Told you so: George Osborne says new figures show economy is turning corner and that he has proved Labour wrong

Chancellor argues that the Government’s strategy has worked, but Miliband will cast it as a ‘recovery for the few’

George Osborne is set to deliver his most upbeat economic assessment yet (Getty)

The British economy is “turning a corner”, George Osborne said today as he claimed victory over the critics who wanted him to change course and adopt a Plan B.

In his most upbeat assessment of the economy yet, the Chancellor warned that many risks remain and that the UK is only in the “early stages of recovery”. He attempted to map out the battle lines for the 2015 election, saying that Labour has lost the economic argument and that its plan to borrow an extra £10bn for building projects would take the country “back to square one”.

Mr Osborne’s critics claim he has quietly abandoned his Plan A for a “Plan A plus”, with moves to boost the housing market and delaying the date by which he would balance the nation’s books. Labour insists the Coalition’s cuts delayed the return to growth for “three wasted years”.

But speaking in London today, Mr Osborne argued that the last few months have decisively ended the controversy about fiscal policy. He claimed those who favour a Plan B have “lost the argument” because they cannot explain improvements in the economic data.

The Chancellor also said that heeding calls to abandon his economic plan by spending and borrowing more would have undermined the recovery and would be “disastrous” now.

Insisting that the emerging recovery is broad-based and sustainable, the Chancellor said the Government’s new regulatory system will spot imbalances in the economy as they emerge. Warning of more spending cuts after the 2015 election, he declared that many tough decisions still have to be taken and that “the only sustainable path to prosperity is to reject the old quick fixes and stick to the course we have set”.

He added: “This is a hard, difficult road we have been following. But it is the only way to deliver a sustained, lasting improvement in the living standards of the British people.”

Mr Osborne claimed the squeeze on living standards would have been even harsher if the Government had bowed to pressure to change course. “The evidence suggests tentative signs of a balanced, broad-based and sustainable recovery, but we cannot take this for granted,” he said.

“More tough choices will be required after the next election to find many billions of further savings and anyone who thinks those decisions can be ducked is not fit for Government. For microeconomic policy, the priority must be following through with our far-reaching economic reforms in order to raise living standards in a sustainable way.”

Labour accused the Chancellor of a "desperate attempt to rewrite history".

"Three wasted years of flatlining under George Osborne have left ordinary families worse off and caused long-term damage to our economy," shadow Treasury minister Chris Leslie said.

"This desperate attempt to rewrite history will not wash when on every test he set himself, this Chancellor's Plan A has badly failed - on living standards, growth and the deficit."

Ed Miliband intends to hit back in his speech to the TUC conference, accusing the Coalition of delivering a “recovery for the few”.

Early copies of his speech show he will argue: “At the moment you hear the Tories congratulating themselves on the economy. But that just show how out of touch with ordinary families they have become. Living standards have been falling for longer than at any time since 1870. Only the privileged few in our society are feeling better off. This is an unfair recovery. This is an unequal recovery. And an unequal recovery won’t be a stable recovery. It won’t be built to last.”

The Labour leader continues: “What makes an economy succeed is not just a few people at the top, but the forgotten wealth creators. The people who put in the hours, do the work, do two jobs. Who get up before George Osborne’s curtains are open in the morning and come back at night well after they have closed. They’re the people who make our economy strong. They’re the people we have to support to make a recovery that lasts.”