WALLASEY MP Angela Eagle warned that the coalition government is derailing the economy.

The Shadow Treasury chief secretary ridiculed Chancellor George Osborne’s claim that his plan to reduce the deficit is “on track.”

The row erupted after figures showed that the economy slowed down between April and June with a growth of just 0.2%, down from 0.5 % in the first three months of this year.

That followed a 0.5% shrinkage in the last quarter of 2010.

Mr Osborne blamed the knock-on effects of harsh winter weather and rising fuel prices.

But Ms Eagle said: “He is trying to get his excuses in early ...that will not wash with the public.

“Every other major economy has faced similar challenges yet their economic recoveries have continued.

“By announcing tax rises and spending cuts which go too far and too fast George Osborne has badly undermined our recovery and did so well before the recent crisis in the Eurozone, leaving us badly exposed if things go wrong later in the year.”

She pointed to expert advice showing that anything less than a 0.8% growth rate showed the government’s economic plans are “off track.”

She added: “Of course we’ve got to get the deficit down, but it can’t be done in a sustainable way without strong growth and jobs.

“It’s high time George Osborne realised that.”

And shadow Chancellor Ed Balls accused Mr Osborne of leading Britain’s economy into a “Greek-style” trap by cutting spending too quickly.”

Meanwhile the Treasury denied reports that the prime minister’s permanent secretary, Jeremy Heywood, “read the riot act” to Mr Osborne’s advisors over the economy.

That suggested David Cameron is dissatisfied with his Chancellor and wants a rethink ahead of an autumn package of fiscal measures.

But a Treasury source said it was a “rubbish tale.”