Ed Balls has just been given a thorough grilling by Andrew Neil on the Daily Politics — particularly on his past assertions that Labour were not running a structural deficit in the years leading up to the financial crisis. Here’s the relevant section of the interview:
In the past, we’ve accused Balls of deploying ‘Brownies’ — deliberately misleading half-truths. But in this case, what he says is flatly untrue.
Let’s start with Balls’ misquoting of his interview with Andrew Mar from January 2011. Here’s what he said then:
Andrew Marr: ‘It is true to say, is it not, that in the run-up to the financial crisis, Britain was running the worst structural deficit — that’s the extra beyond the cycle — of any of the G7 countries?’
Ed Balls: ‘I don’t think we had a structural deficit at all in that period.’
But today, Balls said:
‘His question to me, which you mustn’t take out of context is: “Should you have acted differently in 2007?” Well at the time, the answer is no. In retrospect, ‘cos we now know the world was different, of course there was a structural deficit.’
And what about Balls’ claim that the government didn’t know ‘at the time’ that it was running a structural deficit? Here’s what he said today:
‘Let’s be clear. The charge is, in 2006-07, Labour was being irresponsible given the figures available. The answer is that at that time, given the figures available, there was not a structural deficit on the current account. In retrospect, of course there was. I’ve never denied that.’
So I took a look at the figures available in 2007, and guess what they show? That’s right: a structural deficit.
Here are the Treasury’s own figures from the 2007 Budget, published in March 2007. I’ve included two sets of figures: ‘Cyclically-adjusted public sector net borrowing’ (the structural deficit) and ‘Cyclically-adjusted deficit on current budget’ (the structural deficit on the current account, which Balls referred to).
And the Treasury wasn’t alone in saying the UK was running a structural deficit. Here are the IMF figures from April 2007:
So, yes, the IMF underestimated how big our structural deficit was back in 2007. But both they and the Treasury were saying we had one. Either Ed Balls had his fingers in his ears at the time, or he simply didn’t care. But did he really think no one would check?
Give something clever this Christmas – a year’s subscription to The Spectator for just £75. And we’ll give you a free bottle of champagne. Click here.