They are now calling for tax cuts! 
Labour shadow chancellor Ed Balls has called for "decisive action ... to boost growth", offering suggestions for tax cuts in next month's Budget.
Mr Balls' ideas include a VAT cut, a 3p income tax cut for a year, bringing forward the planned personal allowance rise to £10,000 and higher tax credits.
No tax cut could mean "a permanent dent in our nation's prosperity", he said.
The Conservatives said excessive borrowing and debt under Labour had led to the current financial mess.
Mr Balls told BBC One's The Andrew Marr Show the current austerity measures were "self defeating" and had left Chancellor George Osborne claiming he was "trapped by the credit rating agencies".
The shadow chancellor said he favoured a cut in VAT - which is a sales tax rather than a tax on income - because it would be the "fastest and fairest" way of boosting the economy.
"We've got to get growth back in the economy," he told the programme.
Writing in the Sunday Times, Mr Balls said: "Some people may be surprised to see Labour prioritising tax cuts. But in a crisis there is a premium on what works effectively and quickly to get our economy moving."
He said that such a cut should be funded by borrowing, not more spending cuts.
He claimed it was "absurd" to argue that the £12bn cost of reversing the government's 2.5% VAT rise was unaffordable, when borrowing was £158bn higher than planned because of slower growth and higher unemployment than had been forecast.
"Such a tax cut now would boost confidence, help families feeling the squeeze and help get our economy moving again."
He added: "Without that decisive action in the Budget to boost growth, I fear we are in for a lost decade of slow growth and high unemployment which will leave a permanent dent in our nation's prosperity."
Source: BBC News - Ed Balls suggests Budget tax cut options
This gives Osborne carte blanche to cut taxes in new Budget - assuming his LibDem "partners" are ok with it
Labour shadow chancellor Ed Balls has called for "decisive action ... to boost growth", offering suggestions for tax cuts in next month's Budget.
Mr Balls' ideas include a VAT cut, a 3p income tax cut for a year, bringing forward the planned personal allowance rise to £10,000 and higher tax credits.
No tax cut could mean "a permanent dent in our nation's prosperity", he said.
The Conservatives said excessive borrowing and debt under Labour had led to the current financial mess.
Mr Balls told BBC One's The Andrew Marr Show the current austerity measures were "self defeating" and had left Chancellor George Osborne claiming he was "trapped by the credit rating agencies".
The shadow chancellor said he favoured a cut in VAT - which is a sales tax rather than a tax on income - because it would be the "fastest and fairest" way of boosting the economy.
"We've got to get growth back in the economy," he told the programme.
Writing in the Sunday Times, Mr Balls said: "Some people may be surprised to see Labour prioritising tax cuts. But in a crisis there is a premium on what works effectively and quickly to get our economy moving."
He said that such a cut should be funded by borrowing, not more spending cuts.
He claimed it was "absurd" to argue that the £12bn cost of reversing the government's 2.5% VAT rise was unaffordable, when borrowing was £158bn higher than planned because of slower growth and higher unemployment than had been forecast.
"Such a tax cut now would boost confidence, help families feeling the squeeze and help get our economy moving again."
He added: "Without that decisive action in the Budget to boost growth, I fear we are in for a lost decade of slow growth and high unemployment which will leave a permanent dent in our nation's prosperity."
Source: BBC News - Ed Balls suggests Budget tax cut options
This gives Osborne carte blanche to cut taxes in new Budget - assuming his LibDem "partners" are ok with it
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