07/12/2011 05:19 GMT

Government Defeated Over The Economy In House Of Commons

The Government has suffered its first Commons defeat over a symbolic vote on the economy.

The non-binding resolution was forced to a vote by Labour after six hours of debate on the question of whether the Commons had debated the economy.

The straightforward measure would not typically be voted on. The Government lost the division by 213 to 79, a majority of 134. The motion was in the name of Prime Minister David Cameron.

Earlier, Chancellor George Osborne clashed with shadow chancellor Ed Balls about the state of the economy and last week's Autumn Statement.

Mr Osborne told MPs: "Seven days ago I set out the Office for Budget Responsibility's latest economic forecast and the measures we would take to reinforce our countries fiscal credibility and keep our interest rates low, increase the supply of money, ensure those rates were passed on to businesses and home buyers and lay the foundations for a competitive and more balanced economy in the future.

"In the seven days since I believe events have provided further confirmation of why these measures are necessary. Countries like Ireland and Italy have in the last week announced further budget measures, from VAT rises to pension age increases, reminding us of the value of getting ahead of the markets and not following them.

"The credit ratings of 15 eurozone countries have been put on negative watch. While here in Britain, our interest rates have stabilised, despite the deterioration of the fiscal forecast, so that largely we continue to borrow at below 2.5%."

However Mr Balls said: "The Chancellor of the Exchequer has taken an enormous gamble with the economy, with jobs, with people's lives. And the reality is his gamble has completely backfired."

The shadow chancellor said the International Monetary Fund and Organisation for Economic Co-operation and Development (OECD) had raised concerns about the Chancellor's plan if the economy continued to falter.

The Chancellor said the OECD's chief economist had said: "George Osborne's Plan A is working ... the ambitious fiscal consolidation has bolstered credibility and helped maintain low bond yields, leaving room for automatic stabilisers to work."