PM urges patience over economy
David Cameron insisted the Government has taken "difficult" decisions in order to help ease the cost of living but said patience was required to rebuild the country's economy for the long term.
The Prime Minister welcomed the rise in employment although he acknowledged improvements were needed in the UK's productivity.
He also indicated that he was happy with growth fuelled by consumption as "a recovery has to start somewhere".
Faced with sustained Labour attacks about the squeeze on household finances Mr Cameron told BBC Radio 4's Today programme: "This Government has chosen to take difficult decisions about public spending in order to help people with their standard of living by freezing petrol duty, by cutting income tax, by freezing the council tax, by doing things that make government less expensive."
But he acknowledged that more needed to be done: "If you say to me that all of this takes time and we have to be patient in delivering our long-term economic plan and that we are recovering from the longest and deepest recession that made our country poorer and in order for people to feel better off we need sustained recovery, I absolutely agree.
"But the key thing is to put in place those things that will deliver that sustained recovery: the skills for our young people, the infrastructure for our country, the support for small business that will deliver the employment, cutting people's taxes by keeping spending low so people feel the benefit of the growth, all of those things are part of our plan."
Mr Cameron insisted that the recovery was balanced, but said he wanted to see more growth outside the capital and increased success in the manufacturing sector.
"We are recovering from the longest and deepest recession in living memory and so it takes time and we have to be patient and we have to stick to our long-term economic plan which is going to deliver for people who work hard and play by the rules," he said.
"If you look at the most recent data on the economic figures it's shown quite a balanced recovery. You've seen manufacturing grow as well as services, you are seeing housebuilding and construction growing as well as financial services and consumption.
"So I think we are seeing a balanced recovery. Do I want to see more growth outside of London and the south east? Yes. Do I want to see more export-led growth, more manufacturing growth? Yes, absolutely and that's all part of the long-term economic plan.
"But the economy is moving and above all it's creating jobs. We have seen, compared with when I became Prime Minister, there are 1.3 million more people in work. That is 1.3 million more people with the financial security that a regular pay packet brings."
But he acknowledged concerns about poor productivity compared with international rivals: "I think these things will take time. We do need to see improvements in productivity but frankly I'm glad that the first stages of recovery have been seen in greater employment rather than anything else because I don't want to see people sitting on unemployment registers for a moment longer than they need to."
The Prime Minister echoed Mark Carney's views about consumption-driven growth: "As the Governor of the Bank of England said about consumption, a recovery has to start somewhere and then you can build on that recovery."
An analysis recently circulated by No 10 sought to counter Labour claims of a "cost-of-living crisis" by showing that all but the top 10% of earners saw a real- terms increase in 2012/13.
But the figures came under fire from the Opposition, which accused the Government of ignoring the impact of cuts to tax credits and child benefits on working families.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said that, while the Government had used a "perfectly sensible" set of figures, there were "problems" with its analysis.
He said household incomes had fallen so sharply since the Coalition came to power in 2010, that there was "very little chance" they will have recovered by the time of the next general election in 2015.
Mr Cameron sidestepped a row with the respected IFS, telling Today: "I'll leave the statisticians to argue these things out between them."
But he added: " I want to see living standards improve and that will happen as the economy grows and as we make sure that people feel the benefit of that growth by keeping their taxes down.
"The point I was making last week is that the figures that Labour endlessly quote don't include the tax cuts that we've worked very hard to deliver for people, that's put money back into people's pockets."