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Plaid Cymru Treasury spokesman Jonathan Edwards MP has blasted both Labour and the Conservatives’ financial plans as the autumn statement looms, stating that spending on public services as a percentage of GDP is due to fall to a level not seen since 1938.

The Carmarthen East & Dinefwr MP claims that austerity represents a “catastrophic miscalculation” which has starved the public sector of cash and hurt economic output.

He vowed that in the next parliament Plaid will form an “anti-austerity bloc” with the Greens and the SNP.

His comments come in the same week that provisional figures showed Welsh workers had the lowest average gross weekly pay in Great Britain – £473.40, compared to a UK median of £518.

The latest public finance statistics show Chancellor George Osborne is likely to miss the 12% cut in the annual deficit for 2014-15 pencilled in by the independent Office for Budget Responsibility (OBR). Government borrowing – excluding the effect of bank bail-outs – fell £200m to £7.7bn in October but for the April-October period it was £3.7bn larger than at the same stage last year.

Mr Edwards expects spending on day-to-day public services – excluding welfare payments and debt interest – will represent the lowest share of national income since 1938.

He said: “We warned at the time, and have been proven correct, that reducing public investment too sharply would reduce economic output therefore prolonging the length of the recession. Deficit reduction targets have been missed comprehensively...

“Labour have said they will match Tory spending plans if they form the next Westminster government. Based on the plans of the Treasury, by the time that the deficit is eliminated in 2018-19, spending on public services as a share of GDP will only be 38%, far lower than anything we witnessed under Thatcher governments.

“Spending on public services as a percentage of GDP has not been that low since 1938.”

Mr Edwards said the parties were “signed up to a strategy that radically redefines the role of the state to one which is based on a model more associated with the United States where the public sector is starved of cash and only provides a bare minimum of services”.

However, Shadow Welsh Secretary Owen Smith said Plaid Cymru had “no economic credibility whatsoever”.

He said: “Their call for an independent Wales would see spending here reduced from around £35bn to £17bn, hitting Welsh families hard. In fact the contorted logic of calling for more money from the union, while claiming they would leave it, has seen the so-called party of Wales become a laughing stock on the economy – quite literally on last week’s Question Time.

“What Wales needs – and urgently – is a Labour Government in Westminster. Low pay and falling living standards have become ingrained in our economy under the Tories. That’s why the next Labour Government will increase the minimum wage, freeze energy bills and tackle the cost of living crisis.”

A Treasury spokesman responded to the borrowing figures, saying: “While today’s public finance figures show borrowing is down this month compared to last year, the impact of the great recession is still being felt in our economy and the public finances. At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy.

“That’s why we will continue working through the plan that is building a resilient British economy.”

Samuel Tombs of Capital Economics said: “The latest public borrowing figures showed that the economic recovery is still doing little to heal the public finances and so undermined the view that the books can be balanced through spending cuts alone. In order for borrowing to be 12% lower this year, as set out in the Budget, it would have to be a whopping £15bn or 40% lower than last year in the last five months of the fiscal year.

“A reduction of this scale now looks impossible to achieve.”