Osborne claims austerity victory - FT.com George Osborne speaking on the economy at the One Commercial Street development A bullish George Osborne declared victory on Monday in his battle with Labour over austerity, proclaiming that recovery was under way and that recent "early signs" of growth were a vindication of his economic policies. Seizing on a summer of positive economic data, the chancellor dismissed Labour's argument that deficit reduction was hurting the economy excessively, saying that the opposition could not explain why the economy was "turning a corner" when the government was still practising austerity. Ed Miliband accused the chancellor of "extraordinary complacency" as he prepared on Tuesday to set out his plans to fight the next election on a promise to raise living standards for working people and to better share the fruits of recovery. The rival speeches highlight the intensifying battle in Westminster over how to interpret the recovery. Although Mr Osborne said the upswing was still in its "early stages," the new mood of optimism in the Treasury comes as official figures and business surveys are encouraging some economists to wonder whether the economy is now growing at an annualised rate of over 4 per cent. Vicky Redwood and Martin Beck of Capital Economics said: "The good news on the economy has gone on for so long that even the chancellor now feels confident enough to stick his neck out and call a turning point in the economy. This seems fair. But while Mr Osborne is confident he has won the big argument on the economy, he knows that Labour could still put together a popular package of measures to address popular concerns over the "cost of living." The chancellor said on Monday that concern about rising bills did not "amount to an economic policy." Privately there is growing anxiety in Mr Miliband's circles about the party's sliding poll ratings on the economy, with some senior Labour figures warning that Ed Balls, shadow chancellor, may have to be sacrificed unless things turn around. It's a sticky question. At the moment he is immovable if the party wants to avoid infighting," said one senior ally of the Labour leader. But if in late 2014 he has not managed to improve his image with the public, at that point Ed is going to have to think of replacing him. Some of Mr Miliband's allies even speak of a return of Alistair Darling, former chancellor, as an "interesting proposition" - if Mr Darling can be persuaded to return to the front bench after fronting the pro-union campaign in next autumn's Scottish referendum. In an attempt to exploit the recent run of stronger-than-expected growth forecasts, Mr Osborne said "the last few months have decisively ended" the idea - expounded by Mr Balls - that the coalition's fiscal tightening would strangle any recovery. "Those in favour of Plan B have lost the argument," he said. Mr Osborne, speaking at a construction site in London, said there were "tentative signs of a balanced, broad based and sustainable recovery." Nick Clegg, deputy prime minister, also decried Labour's economic position ahead of his party's conference next week, insisting the Liberal Democrats had "held their nerve" in spite of pressure to change course. Mr Balls insists that Mr Osborne's fiscal squeeze caused the economy to "flatline" for three years, but he told the BBC's World at One that "people want to debate the future." He said the challenge now was to secure the recovery, "catch up lost ground," build a recovery on investment and exports and to boost the living standards of working people. An aide to Mr Miliband said last night. Ed Miliband has made it clear that he expects to go into the next election with Ed Balls as shadow chancellor. Mr Osborne has vowed to fight Labour over living standards, primarily by making the wider argument that a solid economy, growth and falling unemployment but is also preparing a raft of specific measures to be launched at the Tory conference later this month. The chancellor singled out help for families on issues including energy and water bills, road and rail travel, housing costs and the fees paid for retail banking services.