Accused of missing the coalition's target of balancing the books by 2015, the Prime Minister countered: "We have cut the deficit by a third, we will have cut it more by the next election."
He added: "Why, if borrowing is the problem, is the Labour policy to put it up?"
Shadow financial secretary to the Treasury Chris Leslie writes for ITV News in response to the Chancellor's Spending Review.
While the Conservatives and Lib Dem strategies are clear enough, Labour's response to government cuts is not yet obvious.
By excluding pensions and the benefits associated with the economic cycle, Osborne has put an automatic cap on a narrow range of benefits.