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Shadow chancellor Ed Balls has said he doubts that "in his heart of hearts" the Bank of England governor believes the UK economy is on the right track.

Governor Mervyn King said on Tuesday "the right course has been set and it is important we maintain it".

But Mr Balls told the 91�ȱ� that if Mr King said Britain "was on the wrong track" it would have caused a crisis.

Asked if he thought the governor was "being leant on", Mr Balls replied: "I think the governor is being loyal."

Mr Balls' comments came during an interview on The Andrew Marr Show, as he said Chancellor George Osborne was in denial on the need to switch from the economic policy of "crushing spending".

He said Mr King had been "quite right" to resist calls to increase interest rates, adding that "it was very difficult for Mervyn" because the government was putting all the responsibility for growth on the Bank of England.

"I don't think that Mervyn King, in his heart of hearts, really believes that crushing the economy in this way is the right way to get the economy moving," Mr Balls said.

The Bank of England declined to comment.

In a separate interview Mr Osborne told the 91�ȱ� there would be "financial turmoil" if he abandoned his cuts and tax rises.

Mr Osborne told Sunday's 91�ȱ� Politics Show he had to take tough decisions to sort out the "enormously tricky situation" he had inherited and provide a platform for sustainable growth.

Their ongoing battle over economic policies intensified on Tuesday, when the latest GDP figures showed a shock 0.5% contraction in the economy in the final three months of 2010.

Forecasts had been for growth of between 0.2% and 0.6%, but ministers blamed the negative figures on the snow and exceptionally cold weather in December.

to eliminate the deficit by 2015 - rather than halve it as Labour planned - was "irresponsible and dangerous".

He said the US Treasury Secretary Tim Geithner had told the World Economic Forum in Davos this week that rapid and drastic spending cuts were "not the sensible way" to cut national deficits.

He also pointed to the warning issued by the famous investment fund manager George Soros in Davos that the UK's austerity measures could push the country back into recession.

Mr Balls said "simply slamming on the brakes" with tax rises and spending cuts was not a "credible economic policy".

Labour's plan - which Mr Balls had initially criticised as too aggressive - is to halve the deficit within four years.

In his interview on the The Andrew Marr Show, Mr Balls also rejected suggestions that the last Labour government was spending too much going into the financial crisis.

He claimed Labour "did fix the roof while the sun was shining" in terms of cutting the UK's debt and increasing spending on things like schools and the NHS.

But he admitted that the UK and other major economies should have seen the "scale of risk" from the banking sector.