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UK Must Change Course on Austerity: Opposition Leader

Labour Leader Ed Miliband
Peter Macdiarmid | Getty Images
Labour Leader Ed Miliband

The U.K. government has failed to deliver on its promise to significantly improve the economy and kick start growth, Ed Miliband, leader of the opposition Labour Party told CNBC.

Miliband slammed U.K Finance Minister George Osborne,claiming that the poor macro-economic health of the U.K. was evidence that his "Plan A" of austerity was not working.

"After nearly three years of this government's economic plan they should look at the facts. The facts are that it isn't working. Look at what the Chancellor has been promising us: a steady and sustained recovery. If your plan isn't working you can either say let's keep going, doubling the dose or accept that it isn't working and change course, he said.

Speaking at a small business event in London he acknowledged the business community's fight to survive in the weak economic environment saying "life is an incredible struggle for small businesses."

"Increasing voices across the political spectrum [are]saying for example we need investment in our political structure, we need money in people's pockets to get the economy moving," he added.

The U.K economy has struggled in its attempts to regain consistent growth following the financial crisis and the fourth quarter of 2012 showed the economy contracted by 0.3 percent. The sluggish economy prompted a credit rating downgrade by agency Moody's at the end of February resulting in the loss of the coveted Triple A rating. The ratings agency cited the "high and rising debt burden" as one of the reasons for the downgrade.

(Read More: Britain Heads for Recession)

Miliband added that the downgrade was another confirmation of the government's failure to address the issue of growth rather than just an austerity drive and public spending cuts.

"The government have failed the test because we don't have the growth in the economy. The rating agencies are catching up with what people up and down the country know and that's why the Chancellor should change course in the budget. Plan A isn't working, we have a different plan," Miliband said.

Osborne told Parliament shortly after the downgrade that "this government's economic policy is tested day in and day out in the market, and it has not been found wanting today." Osborne's office was not immediately available for comment early on Tuesday.

Following Moody's downgrade sterling has been in sharp decline and hovered around the $1.49 mark earlier this week with some analysts predicting further falls for the beleaguered currency.

(Read More: UK Suffers Blow, Pound Seen Under New Pressure)

Osborne will deliver a budget next week which is likely to be closely watched for any measures aside from further austerity and cuts which will boost the U.K's ailing economy.

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