Alistair Darling: "It is necessary to see slower growth in public spending in the coming years"
Chancellor Alistair Darling has said the government will have to "cut costs" and "shift resources to the front line" to deal with the recession's effects.
He said "hard choices" included looking at selling off "non-essential public sector assets" and shifting resources to "where they are needed most".
But he said cutting spending now risked "choking off" the recovery.
Tory leader David Cameron said Labour's planned spending increases next year were "unaffordable".
In a speech in Cardiff, part of the Chambers of Commerce Business Week, Mr Darling said "targeted public investment" was essential for the economy to recover.
But he said the government was prepared to make the "tough choices necessary" while continuing to build a "fair society".
He said the role of government was important - and accused the previous Conservative administration of abandoning "hundreds of thousands who lost their jobs".
Mr Darling's speech is a signal that Labour is moving to a new line of defence over public spending cuts. Until the summer its line was that the Tories will cut, Labour will invest through the downturn.
In April's Budget, Mr Darling forecast that public borrowing this year would reach £175bn and arguments about how that figure will be reduced are set to dominate the political agenda in the run-up to the general election.
In his own speech earlier, Tory leader David Cameron said only his party was being "straight" with people about dealing with the "deficit crisis".
"We've taken the bold step of saying to the British public very clearly, with a Conservative government, public spending will be cut. Not reduced in growth, not frozen, but cut," he said.
"That candour is a world away from the current Labour government. "
Later he told the BBC the government's argument made "absolutely no sense" because it was predicting that the economy would start to grow this year but was planning a £30bn spending increase next year.
"So even on their own information, they should be doing something to avoid such a large increase in spending next year," he said.
The Liberal Democrats say both of the main parties need to be more honest about the fact that "big programmes" will have to be cut back.
Leader Nick Clegg said last month he recognised "serious savings" had to be made to bring the public finances under control but said frontline services had to be protected.
And Treasury spokesman Vince Cable said the issues of public sector pensions, tax credits which "go right up the income range" and defence contracts such as Trident had to be talked about.
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