The economy is set to grow more slowly than expected and unemployment will be higher, the Government’s independent financial watchdog has warned.

Labour highlighted the predictions as Birmingham MP Liam Byrne (Lab Hodge Hill), the shadow Work and Pensions Secretary, accused the Chancellor of failing to get dole queues down.

The number of people claiming Jobseekers Allowance is set to be 1.4 million in 2013 and 1.3 million in 2014, according to the Office for Budget Responsibility.

But this is 100,000 higher than the Office for Budget Responsibility was predicting a year ago.

Mr Byrne said: “George Osborne has delivered another Budget that puts unemployment up.”

The Office has also revised its growth forecast down, from an earlier forecast of 2.1 per cent in 2011 to a new forecast of 1.7 per cent.

Black Country Labour MP Ian Austin (Duudley North) said: “In June last year Labour told George Osborne he needed a plan for growth.

‘‘Today, growth forecasts have been revised down for a third time, and still this Tory-led Government refuses to listen to reason and change direction before it’s too late.

“Nothing today makes up for the huge level of investment pulled out of the West Midlands through the axing of regional development.”

Labour MP Jack Dromey (Lab Erdington) accused the Chancellor of failing to mention the massive spending cuts being imposed on local councils and public services.

He said: “With unemployment in the West Midlands up by 27,000, growth down and inflation soaring, the Government’s policies are not working but they are certainly hurting the people of Birmingham and Erdington.

“George Osborne has slashed Birmingham City Council’s budget by £212 million next year alone, cutting all care for 3,500 of the most vulnerable and our senior citizens. He then has the cheek to pretend his budget is fair.

‘‘It is grotesquely unfair that if you live in leafy Wokingham in Surrey, you lose £4 per person. If you live in high need, high unemployment Birmingham, you lose £102.”