The shadow chancellor has warned that Labour would not be able to reverse any spending cuts or tax rises if elected.

Interviewed by today presenter James Naughtie, Ed Balls said he understood people's frustration but insisted that pay restraint would have to continue.

Mr Balls said voters faced a choice between higher public sector pay or tackling rising unemployment.

"George Osborne clearly hoped he would be able to have tax cuts later in the parliament and rising public pay. It's not going to happen because of his failures," he said.

"People might expect me to come along and say 'well of course we will back higher pay'.

"It's a question of priorities. I can't say to private and public workers or to the country that Labour would put higher pay above jobs when unemployment is so high.

"We've got to be honest with people about the choices they face."

And he added that the economy was "stagnating" because of Mr Osborne's policies.

Referring to the string of credit downgrades in the eurozone last night, Mr Ballssaid the chancellor "won't listen to ratings agencies telling the eurozone austerity is self defeating".

Any government would have had to be "tough on pay", he said, adding: "It's going to be tougher because of George Osborne's mistakes but I can't promise to reverse that now."

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