The government's decision to outline tough spending cuts a year ago showed the UK was the "master of its own destiny", a cabinet minister has said.
Treasury Secretary Danny Alexander said the coalition's deficit reduction plan had kept interest rates low and established market credibility.
But Labour said the economy had not grown at all since the plans set out in the October 2010 spending review.
Shadow chancellor Ed Balls urged ministers to "change course".
The opposition is using the anniversary of the spending review to reiterate its call for emergency measures to kick-start the economy, such as a temporary cut in VAT and tax breaks for small business.
A year ago, ministers announced plans for a £81bn reduction in total spending between 2011 and 2015, with only the NHS and the international aid budgets ringfenced from budget cuts.
Labour said the government's austerity measures had gone "further and faster" than any other major economy but were not working - proven by the fact the economy had "flatlined" over the past year.
Mr Balls said recent events showed ministers had been wrong to claim a year ago that Britain was "out of the danger zone".
"Our economy has not grown at all since the spending review, inflation is soaring, unemployment is at a 17-year high and the result is £46 billion more borrowing than the government planned," he said.
"How many more jobs must be lost and businesses go bust before this out-of-touch prime minister and chancellor realise it is time to change course? We need an emergency Budget now to boost jobs and growth."
'Ahead of the game'
Mr Alexander, number two at the Treasury, acknowledged the spending decisions had been "difficult" but said they had put the UK on track to significantly reduce the budget deficit this year and provide the "foundation" for long-term economic stability.
"When we came into office we had one of the worst budget deficits in history," he said. "We are getting our public finances under control. We have established some credibility which is helping to keep interest rates in this country low.
"By getting ahead of the game, by showing we are masters of our destiny, we have helped to establish a degree of credibility which means we are not facing many of the challenges that many our neighbours in the eurozone do."
He added: "That is why the set of decisions we took a year ago are absolutely the right thing for our country."
With inflation rising to 5.2% and energy bills soaring, Mr Alexander conceded "families are under huge financial pressure".
But despite the budget squeeze across Whitehall, Mr Alexander said ministers were still able to "focus resources on the most disadvantaged" by cutting tax for the lowest-paid, protecting spending on the NHS and boosting early years education.
"We are facing huge challenges at the moment, not least from the problems in the eurozone," he added.
"But because of the decisions we have taken as a government we are in a stronger position than many countries to weather those storms and ensure we come out strongly the other side."
David Cameron and Ed Miliband clashed over the economy in the Commons on Wednesday - the prime minister admitting inflation was too high but saying Labour's plan to cut VAT would increase borrowing further and was "crazy".