29/04/2012 02:49 BST | Updated 28/06/2012 06:12 BST

Ed Balls Warns Of 'Lost Decade' As Double Dip Recession Takes Hold

Britain is facing the prospect of a "lost decade" of sluggish growth and high unemployment if the Government will not change course on the economy, shadow chancellor Ed Balls has warned.

After shock figures showed the economy was back in recession, Mr Balls said there was a risk of prolonged stagnation in the UK like that experienced by Japan in the 1990s.

Prime Minister David Cameron has insisted there will be no change to the coalition's programme of austerity and deficit reduction despite the double-dip.

But Mr Balls told The Observer that lacklustre growth could be an issue for "a very long time".

"I am not predicting years of recession, although we could well be in for a long 'lost decade'-style period of slow growth and high unemployment," he said.

He added there was a danger that "the economy continues to underperform and, Japanese-style, it grows below trend and therefore unemployment stays high".

"That sort of stagnation is consistent with a bit of growth, but not enough, that could go on for a very long time," he added.

Mr Balls challenged Chancellor George Osborne to a live televised debate on how the economy could be pulled out of recession.

"There are big choices to be made about how we get out of this very deep hole," he said.

"We have to find a way to talk this through and try to get to a better place."

Mr Balls said the latest figures proved he had been right to warn that the coalition's strategy was "too far and too fast".

"In politics and especially in economics and politics, when things start to go wrong, the sooner you admit it the better," he said.

"The thing that frustrates me is that for a year is how arrogantly George Osborne has said, 'No my plan will work - you are wrong', and we are a year on and it is now too late."