Coffee House

Can Ed Balls really crow about the downgrade?

23 February 2013

23 February 2013

As George Osborne digests the news of the Moody’s downgrade, he can thank his lucky stars for Ed Balls. The Shadow Chancellor’s statement, just released, neatly illustrates why he is the single biggest obstacle to Labour’s regaining economic credibility:-

“George Osborne said keeping the credit rating was the key goal of his economic policy. As his economic plan has floundered, it has been the last thing he has clung on to. And bizarrely his response tonight suggests he is not reflecting on why things have gone so badly wrong, but using this downgrade as one more reason to plough on with his failing plan – regardless of the damaging impact on struggling families and businesses.

Bizarre? Not nearly as bizarre as responding to the Moody’s downgrade by borrowing-and-spending even more – which is Balls’ proposed solution to this (and every other) problem. About £200bn more, according to IFS analysis of Labour plans. Balls is a classic debt addict, displaying his symptoms tonight:-

“In the Budget, the government must urgently take action to kick-start our flatlining economy and realise that we need growth to get the deficit down. If David Cameron and George Osborne fail to do so and put political pride above the national economic interest we face more long-term damage and pain for businesses and families.”

It doesn’t take a PhD in economics to see the flaw in Balls’ plan. Yes, growth has been abysmal. But the problem is that the government is already enacting on a massive debt-fuelled spending stimulus, and that it doesn’t work. Osborne will spend £92 billion more than he collects in tax over 2012/13. This stimulus, which amounts to a mammoth 6pc of GDP, is rather obviously producing very little results. Hence the downgrade.

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Would Balls really have us believe that things would be so much better if Osborne had borrowed-and-spent, say, £102 billion rather than £92 billion? And why would the extra £10 billion of spending “kick-start” the economy if £92 billion has not done so? The fiscal drugs don’t work. The growth hasn’t arrived – but we’re stuck with the debt.

If it were Alistair Darling fronting Labour’s attack, it may carry some force. Darling may say the debt should be used to cut taxes for the low-paid rather than the extra spending. That would be a more challenging critique, and one I’d have much sympathy with. But with Balls it’s just spend, spend, spend – which Osborne is doing. Just not (quite) as much as Balls wants.

Moody’s is calling time on this borrow-and-spend party – yet Balls is standing in the bar, vowing to drink himself sober. Seeing him on the TV tomorrow will remind voters that, no matter how bad things are with Osborne, they could be a hell of a lot worse.

 


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Show comments
  • freethinker14

    Unfortunately, this baffon will be our next chancellor as UKIP will ensure a Labour victory. Time to dust off those immigration papers

  • aaaa

    crazy right wingers
    Osbourne is not spending 92 billion on a stimulus,tax revenue has fallen. its old spending not new and once you take into account inflation its not that much. Spending has been cut across departments

  • http://twitter.com/MisterQuintus Tony Quintus

    Given that Moodys have stated that they believe Osbourne’s course of action is the correct one and shouldn’t be changed I think balls should wind his neck in, it certainly doesn’t help overall economic confidence to have the opposition constantly telling anyone who will listen that the government is pushing the economy into the gutter without a word as to how it could be fixed.

    • Democritus

      Moody’s report stated that the reason for the down grade was because of the lack of growth in the economy due to deleveraging by the government and private sector. Although they agreed that debt needed to come down they also were looking for the government to increase stimulus to get the economy moving.

      The job of the opposition is to question the governments actions and hold them to account not to hold their hand and give them policies. That is the way our parliament has worked for hundreds of years and all parties of all persuasions have took part..

      • http://twitter.com/MisterQuintus Tony Quintus

        Yes, question, not insult, barrack and heckle.

        • Democritus

          This opposition is behaving in exactly the same way as the last opposition and the one before that and the one before that and the one before…………………..

          Go and search you-tube for past prime minister’s question times. What you see today is no worse than what the last government had to put up with.

  • http://www.facebook.com/jacob.r.hill Jacob ‘Rage’ Hill

    Balls to Labour.

  • derekemery

    Wasn’t Balls Treasury Advisor to Brown from the early days (The Chancellor’s Golden Boy) – so what else do you need to know really? Balls was also in favour of maximal loose financial devaluation which then allowed banks to become virtually bankrupt from huge debt while regulators slept at their desks. The Glass Steagal act in the US was precisely to prevent banks getting into trouble this way by separating commercial from investment banking. In effect the UK is bringing in a version of this today. Balls shows little sign of understanding risks.

    Both Labour and the Lib Dems believe that spending more on “investment” in the public sector is the way of solving our economic problems. 110% of GDP is expected by 2016 and no growth to show for the extra borrowing.
    Conservative policy is a watered down version of Labour’s policy. It can be presumed that Labour will therefore further increase the debt and spend above that of the Conservatives. I bet the ratings companies will further reduce the UK’s rating as the debt rises over the next few years.

  • bengeo

    I was a tourist in Boston, Massachusetts in October 2008. When we stopped local people to ask for directions in the street, and they realised we were British, they apologised for their country being guilty of bankrupting us.

  • Kubrickguy

    Re Ed Balls: He doesn’t have any credibility, given the mess his party left (and his response to it). He’s the equivalent of the friend who borrows your car and trashes it, but then lectures you on how to fix it and how much you should spend to fix it.

  • http://www.facebook.com/mark.rowley.7524 Mark Rowley

    How Balls can even look himself in the mirror given his effrontery, I know not.
    His criticism is akin to a burglar who has broken into your home, rummaged through your drawers, ransacked your possessions and then, for good measure, taken a dump behind the sofa, only to complain about the state of your house. Utterly shameless.

  • Democritus

    In 2010 we were coming out of recession. After the election the first thing the coalition did was cancel all capital building projects including the rebuilding of schools because “the country couldn’t afford it”. Then they increased VAT from 17.5% to 20% and froze public sector pay. These actions squeezed the life out of the recovery and sent us back into recession.

    2 1/2 years later Osborne had an amazing idea, they were going to start capital building projects to stimulate the economy. He then came up with another massively amazing idea to start rebuilding schools.

    Now my question is if the country couldn’t afford capital projects in 2010 how can we afford them in 2013 when the government are borrowing even more money?

    It seems that our chancellor has conceded that plan A wasn’t working and has now reverted back to the recovery policies of the previous goverment.

  • CHRISTOPHER WHITE

    This man’s cynicism is breath-taking – chief architect of crisis – then makes political capital out of problems with the only way of solving it – he E M & Alexander Brown’s enforcers

  • David B

    I think Balls sees himself as a new FDR, borrowing and spending all that money in a new deal style.

    He needs to read the report, the downgrade was largely due to debt to GDP ratio. Increasing the borrowing increases this ratio. The borrowing and spending of 2008 to 2010 did not increase growth by enough to cover the amount borrowed, so why will a similar borrow and spend policy work now?

  • BenM_Kent

    This is an economically and financially illiterate piece.

    • Daniel Maris

      This is a comment without content. Please explain what you mean.

  • pigou_a

    Oh Fraser, you are laughably out of your depth when it comes to economics.

    Where have you got the idea that the deficit is equivalent to a stimulus? Do you really not understand the difference?

    I take it, like the soon to be fired Osborne, you have still not read DeLong and Summers’ paper “Fiscal policy in a depressed economy”?

    Why are conservatives universally dumb? I don’t get it. Did you really think “austerity” would work? Despite two centuries of economic thought which suggested it was a pretty bad idea? Did you really not understand that if you screw over the economy you ain’t going to win an election?

    Maybe Cameron and Osborne are gunning for a political equivalent of a Darwin Award? Funnily enough, not unlike the pathetic remnants of the British press corps. Their epitaphs should read “too dumb for the 21st century”.

    • David B

      But u miss the base questions how much extra borrowing and spending will be a stimulus? The government borrowed £92m and spent it, where would the extra be spent that how would that create growth while the current spending doesn’t?

      • pigou_a

        There didn’t seem to be much point engaging Fraser in the finer detail of the size of the fiscal multipliers for different government spending when interest rates are at the zero lower bound, when he hasn’t even grasped the distinction between deficit and stimulus.

        • David B

          Don’t want to speak for Fraser but if you borrow money today, for what every purpose, it will increase the deficit – Borrowing more and not repaying esisting debt means amount borrowed goes up. If you increase the current deficit, you also by defination increase the national debt, because the deficit adds to the national debt every year.

          Don’t want to be rude, but it appears you are the one that does not understand the nature of the deficit and national debt. An amount borrowed for a stimulus will increase the deficit, because you want extra borrowing. The hope is that a stimulus will increase economic activity and tax receipts so that it will pay off the amount borrowed. The lessons of the 2008 to 2010 stimulus is that the amount borrrowed did not generate the economic growth necessary to cover its costs. In those circumstances another stimulus will not benefit the economy, but act as a futher drag.

          • Democritus

            Attempting to measure stimulus growth over such a short term is pointless. but the economy was growing at the time of the election. The cancellation of the stimulus package, the increase in VAT and the pay freeze of 1 million workers choked off the growth in the economy and pushed us back into recession.

            in 1947 Britain’s debt stood at 250% of GDP but in that year the NHS was created. Other capital building projects were started throughout the late 40’s that pushed the economy into growth that lasted for over 20 years and paid off our national debt.

            • David B

              But if you cannot measure the stimulus over a short term of 2 years how can you measure the result of its removal over a similarly short term?

              • Democritus

                It isn’t about just removing the stimulus. Increasing tax, freezing public sector pay and cancelling capital projects reduces the money supply in the economy and has an immediate effect. stimulus by capital projects increases the money supply by £3 for every pound the government spends over time. which in turn leads to increasing the growth of GDP and borrowing as a percentage of GDP starts to fall.

              • Democritus

                http://www.bbc.co.uk/news/business-21598509

                John Longworth, director general of the British Chambers of Commerce, said: “These figures, coupled with the recent downgrade of the UK’s credit rating, confirm that action must be taken quickly to get the economy growing again.”

                “The chancellor should seize the opportunity in next month’s
                Budget to be radical, and introduce measures that create an environment of enterprise, stimulate export growth, kick-start infrastructure projects and create a structure of business finance which supports growing companies.”

                I’m glad somebody agrees with me (and Ed Balls).

      • Democritus

        The extra money the government is borrowing is because the economy is flat-lining and the tax take is reducing. The point of stimulating the economy is to get it growing so that the tax take goes up and borrowing decreases.

        • David B

          Ed Balls is calling for extra borrowing on top of the existing borrowing. What will this extra borrowing be spent on and how will that stimulate the economy?

          • Democritus

            George Osborne has also admitted that borrowing will continue to increase to at least 2015. This extra borrowing is needed to replace the reducing government income from taxes.

            In 2010 this government cancelled the stimulus package put in place by the previous government on the basis that we couldn’t afford it. since then borrowing has ballooned. Recently GO has gone to plan B and introduced a stimulus package of capital building projects, rebuilding schools (that was cancelled in 2010) and the high speed rail link.

            • David B

              And the US kept its stimulus going, the economy has flat lined and debt has ballooned.

              Simply put Brown and Balls borrowed and spend in the good times so when the recession hit the economy was paralysed by debt.

              • Democritus

                Are you kidding? The US has had 13 quarters of continuous growth in GDP. They have increased GDP from $14 trillion to $16 trillion in the last three years.

                Since 1980 the treasury has only shown a surplus on six years. Four of those years was under the last Labour Government.

                Ed balls served one year as a junior minister in the treasury before being promoted to Secretary of State for Children, Schools and Families. That’s like blaming Sajid Javid for all the ills of this government’s economic policy!

  • http://twitter.com/bencorde ben corde

    This is the man who left us with the worst legacy of debt in the history of the UK. He should be locked up if there was any justice in the world.

    • Democritus

      Well no actually Debt was far higher during the period between the end of the first world war to the 1960’s. I don’t recall any government official being imprisoned during those 50 years.

  • Liberanos

    Brown couldn’t do it, Darling couldn’t do it, Osborne couldn’t do it. Frankly, J. Christ couldn’t do it…in a democracy.
    When politicians devote their every waking minute looking for ways to increase their chance of being re-elected, it’s hopelessly unreasonable to expect them to guarantee defeat by imposing the draconian and deeply unpleasant action needed to rescue the economy.
    The answer would be a ruthless dictatorship, kept in position by the military, elections suspended for ten years.
    No one, including me, wants that.
    So we struggle on, being nice, being democratic, being poor.

    • Daniel Maris

      You’ve no evidence for that. In Greece a majority was won for a very nasty austerity approach.

  • Russell

    Labour almost bankrupted this country by the end of their terms in office in 2010. If the electorate are stupid enough to forget about the shambles labour left not only the economy in, but education, welfare, councils, quangos, size of public sector workforce, the NHS and every other department of government, and labour get back into office, this country will get bankrupted with the idiots Balls & Miliband.
    The UK would rapidly descend to the Greek model.

    Osborne hasn’t got it right, but, he is correct with the ‘goal of getting public spending down and private sector employment up (to pay for a much smaller public sector).
    Osborne and Cameron haven’t been as bold as they should have been in making big ‘cuts’ at the start in 2010, in fact they have hardly scratched the surface with the cuts that are needed to sort out the economy.

    • BenM_Kent

      In the last year of Labour’s term economic growth was over 2pc. In the subsequent 30 months it has been just 0.5pc.

      If anyone is pitching the country close to bankruptcy it is the Tories with their no-growth, higher debt austerity.

  • andagain

    You know, a year ago, when they were talking about liberalising the planning system to boost the economy, almost 100% of the opposition came from the conservative press – particularly the Telegraph. I recall the Telegraph crowing about its success in gutting the changes.

    If I were Labour, I would talk about the government abandoning its own reform program to protect the vested interests of the rich. Not that they will. They would rather say that the real problem is that the Tories are not spending enough on benefits.

    • Makroon

      You are correct in a way.
      Labour are foregoing a big opportunity to grab some economic credibility back by sticking with Balls and his Brownite nonsense.
      I can’t think of a likely candidate, but a younger Darling type figure, saying that the situation is dire but soluble, through better focussed reductions in public spending and stimulation of the economy, would probably gain traction with the floating voters.
      The huge client vote would never buy it though.

      • andagain

        The client vote is not the problem – it is not as if they have anywhere to go. The problem is opposition within the Labour Party itself. The problem is Labour members, not Labour voters.

        Analogously, the Tories did not abandom planning reform because of public pressure – most of the public hardly noticed. Their problem was with their members, not their voters.

  • revkevblue

    He should have spent it on capital projects, not on bailing out casino banks.

  • andagain

    The Shadow Chancellor’s statement, just released, neatly illustrates why he is the single biggest obstacle to Labour’s regaining economic credibility

    He would do better to point out that the recovery stopped dead at almost the exact moment the Conservative Party entered government.

    • Colonel Mustard

      A lie.

      • andagain

        There is a graph on this Spectator article labelled “Worst recovery in history”.:

        http://blogs.spectator.co.uk/coffeehouse/2013/01/worst-recovery-in-history-british-gdp-shrinks-by-0-3-per-cent/

        It shows a sharp drop in GDP, followed by a somewhat sluggish recovery, which petered out 2.5 years after the recession stared in Q1 of 2008. The Conservative Party entered government in May 2010.

        So I think it is quite fair to say that the recovery ended shortly after the Conservatives entered government.

        • Daniel Maris

          Yes, that’s the graph I was referring to above. Colonel Mustard hasn’t explained why that graph is anything other than bad news for the Tories.

      • http://twitter.com/jackmustard1997 jack mustard

        Five consecutive quarters of growth before Osborne’s policies took effect. The UK economy has been flatlining since.

        • the viceroy’s gin

          Yes, the Cameroons are placeholders only. They will be gone shortly.

          “It could be worse” is never going to get the job done.

        • Colonel Mustard

          More dishonesty. Growth rose from 0.6% to 0.7% after the election and only dropped again in Q4 – even then not as low as 2009 under Labour. Check the charts rather than your Labour propaganda script.

          • http://twitter.com/jackmustard1997 jack mustard

            That’s right. – growth dropped in Q4 2010 – when Osborne’s economic policies started taking effect. It’s a basic law of economics that there is a lag of about 6 months before a government’s actions have an impact. You really don’t know what you’re talking about, do you?

            • Daniel Maris

              You’re right on this one. Osborne can reasonably argue “It would have been worse under Labour” but he can’t argue “Since we took over growth has recovered.”

            • Colonel Mustard

              Do you seriously expect anyone to believe that the Q4 drop was precisely the consequence of the Coalition’s “actions” in the period April, May and June 2010 when the General Election was in May? Perhaps you have forgotten Byrne’s memorable statement to his successor that “the money is all gone”?

              And how about the more serious drop in mid-2009. I suppose that was down to the recession and not to the Labour government’s “actions” six months previously?

              Nice last sentence to add the obligatory attempt to discredit but even economists do not agree on the interpretation of the figures, let alone the political parties. What you are talking about is from the notion that Labour and its advocates must always be correct. Your arrogance speaks for itself.

          • Daniel Maris

            Check Fraser’s graph.

      • Daniel Maris

        I think you’ll find it’s the truth.

    • Daniel Maris

      Quite. And I am reasonably sure the graph you are referencing will be a big feature in Labour’s Party Political Broadcast come the general election.

  • Gawain

    Poor George. He thought he was being ever so grown up an macho boasting that he was going to ensure that he was going to protect Britain’s AAA rating. Unfortunately, in the real world no one relies on the rating agencies. The markets did their own credit assessment on the British economy months ago and the voters have already done their credibility assessment on Osborne and Danny Alexander. The economy is in a rut and the current Treasury “team” hash’t got a clue.

    Fortunately, Cameron has the perfect excuse with a debacle looming in Eastleigh to dump Cameron and Alexander. It’s the zeitgeist you see. Post crash the people at the top have to take the blame. Osborne and Alexander are perfect, weedy, unpopular fall guys. If he fails to do this the election is definitely lost and the Labour lunatics will be in charge of the asylum. That really would be a tragedy and if it does we will all have to learn the difference between an “investment” grade and “junk” grade rating.

    • Russell

      Most of what you say is correct, however, the “markets did their own credit assessment on the British economy” and have found that Osborne is right in thought, but light on action, and the ineterst rate charged to the UK is still one of the lowest in the world, on a par with the US, and better than France who both were downgraded from AAA status.

      • Makroon

        Osborne’s team could be improved. Hammond and Laws would make a difference. Taxi for Alexander !

        • Russell

          I agree, Hatchet man Hammond should have been in the Treasury from 2010 onwards and although I dislike Laws (primarily because of his expenses fraud), think he could have also brought in some discipline on addressing the pubic sector spending reductions necessary.

    • Daniel Maris

      Cameron could no more cut Osborne adrift than he could cut off his own nadgers.

  • Makroon

    So, what has changed since yesterday ?
    Moody has dropped us a notch to parity with the US, France and Holland.
    There is a risk that if another agency joins them, debt servicing costs might creep up a tad.
    The EU in it’s wisdom, sees our growth in 2013, at 0.9%, with “green shoots” emerging,
    (the “green shoots” in my garden have taken a hammering this week).
    The Eurozone growth forecast has been trimmed back to a more realistic figure.
    So we are supposed to do marginally better than our European neighbours this year.
    But these are all forecasts (which are always wrong), and assessments based on doubts about the future.
    It’s political fun ‘n games, but the slow grind of repairing the economy (deleveraging in Americanese), trundles on.

    • Daniel Maris

      You can’t deleverage if your loan repayments go through the roof. That’s the significance of losing the triple A rating…that we might begin to lose control of the situation.

  • Ron Todd

    It wouldbe bad politics for Balls and his allies in the media to openly gloat at bad economic news.

    • http://twitter.com/jackmustard1997 jack mustard

      It would. But it is good politics to remind the voters that virtually every call Osborne has made has been wrong, his predicted outcomes have been uniformly wrong, and his stated objectives have failed.

      • Colonel Mustard

        Set up to fail by Brown and the Labour party’s “scorched earth”.

        “The money is all gone”.

        • http://twitter.com/jackmustard1997 jack mustard

          The Osborne effect: growth wiped out; the workforce underemployed; the economy downgraded; debt growing; the deficit increasing; benefits bill increasing; government revenues falling; youth unemployment increasing. Time for your guys to start accepting some of that responsibility they like to preach about.

  • Paul Danon

    Shome mishtake with “enacting on”?

  • http://www.facebook.com/paul.ostoya.5 Fred Flintsone

    Both the UK’s inflation rate and expectation of future inflation have
    picked up dramatically in effect tying the BOE’s hands as far as any
    more QE is concerned

    • the viceroy’s gin

      How so?

      King Mervyn prints what he wants.

  • HooksLaw

    We have a deficit because the government which the coalition inherited was spending too much. A large chunk of the economy – the finanical sector – which Labour relied on for growth has tanked; it was eviscerated on its, Balls’ watch. The only option he has left to generate his fatuous growth is more borrowing.

    Growth will not cover that excess spending – it did not when Balls was in the Treasury either. There is no short term way of cutting that spending and no short term way of rebalancing the economy to generate the income to start paying back the debt.
    If current growth levels were taken in isolation, like the downgrade there might be cause for criticism, but the Eurozone is set for another year of recession, they say so themselves, and has the USA come up with a deficit reduction plan yet? No. 4Q growth in the USA was disappointing.

    Indeed its these external factors which are the worrying issue. A large part of the deficit is cyclical due to a stagnant world economy. Instead of offering easy options Balls should be telling it like it is – we face years of austerity thanks to the great pall of debt labour left hanging over us.

  • Deepsnoozer

    So what you are telling us Mr Nelson is that you are a dyed-in-the-wool Tory who doesn’t really care how bad the economy gets for ordinary people. You will always be a Tory. Well thanks for that!

  • Andy

    To answer your question Fraser, Ed Balls cannot crow at all at this downgrade.

    Lets be honest and assign the blame where it actually belongs. This is ALL a result of the total and utter incompetence of Gordon the Moron Brown, who was aided by his nasty bullyboy Ed bollocks Balls and Wee Millipede. It is they who have ruined the British economy and we will suffer from them for a generation and probably longer.

    So this is Gordon Brown’s Greatest Achievement. He ought to be hanged.

  • Gary Sawyer

    Fraser, what economic qualifications do you have to comment? Come to think of it, what are Osborne’s? Maybe that’s why your article is thin on viable content, much like the UK economy.

  • Alex

    I’m not sure why you think Darling has more credibility; the main reason we are in this situation is that he ran a 6% structural deficit during a boom.
    If you run a surplus during a boom you can boost the economy in a downturn by running a deficit. If you run a deficit during a boom you can’t afford to. So simple everybody except the Labour front bench can understand it.

    • Count Dooku

      To be fair to Darling, he did cut the deficit when he took over and he was under immense pressure from Brown in 2009/10 to stimulate.
      He basically stopped running the Treasury after 2009.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        He stopped Hank Paulson from offloading Lehmans liabilities onto the British taxpayer

        • Count Dooku

          Yes, he’s the only Labour politician I have any respect for. Always a pragmatist, a bit of a gentleman and not an ideologue by any stretch of the imagination.
          He’d have made a great PM. Nice, boring and invisible just like Major.

          • 2trueblue

            He ran off to the EU to give them £11billion in the last few days of Liebores reign, so have little respect for him. Osborne did ask him to wait, as the Tories were getting the coalition together. He was also a property flipper, on the tax payer. Not so boring when it came to it.

  • rgtgthyjyjy

    Labour are just as bad

    The reasons why we lost the AAA rating is because the government pay billions in foreign aid, billions to the EU, let foreigners claim benefits and have not got immigration under control. They help everyone except the British people and we have had enough

    Sign this petition to restrict Bulgarian and Romanians from entering the UK:

    http://epetitions.direct.gov.uk/petitions/41492

    • http://twitter.com/jackmustard1997 jack mustard

      Sorry, just had a look at the reasons Moody’s gave for the downgrade – none of the cack you list is mentioned. Osbornomics are wrong; you are wrong too – just differently so.

    • Grrr8

      Somewhere else I posted that this ratings downgrade was going to attrack maggots to a pile of s&&t. You are clearly one of those maggots.

  • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

    Since 1964 Debt has grown exponentially in the US and UK and trade deficits have exploded with the US and UK holding No1 and No2 position globally. It is clear that Consumption has been debt-financed for at least 40 years and the currencies have been debased, the corporate heritage sold off to foreign capital, and the recycling of foreign surpluses has loaded liabilities onto the taxpayer base. It is bizarre that 25 years ago the USA was the world’s No1 Creditor and is now the world’s No1 Debtor on a scale unprecdented in world history. The bulk of UK Debt is Bank-related not Government and not Household Borrowing.

    • Grrr8

      Best to not comment on something you don’t understand Tommy laddie.

  • dalai guevara

    The debate about all matters economic has come to its denouement – the current choices on offer,
    Plan A George
    Plan B Ed
    just do not promise any satisfactory outcome at all. I for one am not holding my breath.

  • Jules

    Ed Balls has been right from the beginning and he is right now. He has called it right everytime. The Tory’s and their supporters hate and fear him because of this. Labour are 12% ahead in the polls and WILL for the next Government. Balls will have the last laugh.

    • Colonel Mustard

      Balls best economy is with the truth. He might have the last laugh but there will be tears before bedtime – as always with a Labour government.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Balls knows very little Economics

        • Democritus

          “Balls knows very little Economics”

          Really? shall we compare GO and EB’s CV?

          Ed Balls attended Keble College, Oxford where he gained a 1st class degree in Politics, Philosophy and economics. After completing his degree he was given a Kennedy scholarship to attend Harvard university specialising in economics. This scholaship is only offered to a few (6 to 8) exceptional british students each year.

          George Osborne was awarded a demyship (scholarship for poor students) to attend Magdalen College, Oxford where he gained a 2nd class degree in modern history. He also attended (for one semester) Davidson college, North Carolina (a private liberal arts college).

          work history;
          EB;
          89/90 teaching fellow in the Department of Economics, Harvard University
          90/94 Lead economic writer for the Financial times http://en.wikipedia.org/wiki/Leader_writer
          94/97 economic adviser to the shadow chancellor
          97/04 chairman of HM Treasury’s Council of Economic Advisers.
          05 elected MP.

          GO;
          92/93 several part time jobs including data entry clerk in the NHS and towel folder at Selfridges.
          93/ shortlisted for but failed to gain a place on The Times journalist trainee scheme.
          93/94 did freelance work on the Peterborough diary column of The Daily Telegraph.
          94/95 joined the Conservative Research Department and became head of its Political Section.
          95/97 special adviser to the Minister of Agriculture (during the BSE crisis).
          97/ worked on Prime Minister John Major’s campaign team in the run-up to the Tories’ heavy election defeat.
          97/ approached The Times to be a leader writer, nothing came of it.
          97/01 Speech writer for William Hague, Michael Howard and David Cameron
          01 elected MP.

          I think Ed balls knows a lot more about economics than our present chancellor!

          • http://twitter.com/MisterQuintus Tony Quintus

            Then why did everything get screwed up under his watch?

            • Democritus

              Ed Balls wasn’t the chancellor, how could it be under his watch? That would be like blaming Danny Alexander for all the screw ups under this government.

      • HooksLaw

        Good point

    • Makroon

      I take it you are the relief for Telemachus ?
      Full-time, or agency ?

    • HJ777

      Who was it that said: “You can fall all of the people some of the time, and some of the people all of the time”?

      It would seem that you are one of the “some of the people” – and Balls knows this.

    • David B

      Balls is the reason we are in this mess. From the moment the spending taps were turned on in 2000 this was were it would end. Balls is now offering to pour more gin into the punch bowl so that we don’t feel the hangover. It’s not a cure its a con and if we ever have the misfortune of Ed Balls as chancellor the next recession will be even worse

  • http://www.facebook.com/people/Hilton-Holloway/708772773 Hilton Holloway

    One day this website’s Lefty lurkers will grow up and realise you cannot make people go out and spend – and be in no doubt consumption is the biggest part of the economy – even after years of super-low interest rates. People are paying debt down and being careful with their money.

    As Tullett Prebon showed a couple of years ago, the vast bulk of ‘growth’ in the UK under New Labour was booming public spending and the housing boom. All that has gone. The irony is that the Left is in a blind panic because the turbo welfare state requires turbo consumption.

    But those days are gone. The ever-rising state spending seen since 1945 is over. Very slight growth is the new norm. I suppose the Lib-Lab pact of 2015 will have one last go at turning the taps on.

    Only by the end of a flat decade will the looney metro-Left finally begin to realise that they really can’t bluster the boom back.

    • Jules

      You cannot make people spend but if you reduce their income via reduction in tax credits, benefits and introduce VAT rises and bedroom taxes etc, this reduces the money people have to spend and the economy contracts. Osborne is a failure.

      • realfish

        What money? The monopoly money that we keep having to print to ‘pay’ for the things we can no longer afford?

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          The ordinary public do not see that money. It is locked inside Banks and Hedge Funds.

          • http://twitter.com/davidcshipley David Shipley

            I don’t think you understand QE, or what a hedge fund is.

    • Colonel Mustard

      Unfortunately they are not just lurkers. Whenever there is an article like this they pile in with their predictable and dishonest tripe, with connived at lines like “bedroom tax”. As they are convinced they will win in 2015 (God help England if they do) I wonder why they bother.

    • Grrr8

      Yes consumers are de-leveraging. That’s precisely why the state should not be. Particularly when interest rates for gilts are at historical lows.

      • HooksLaw

        The state is not deleveraging – its allowing the normal levers of the economy to work in a recession. But the govt inherited a massive structural deficit. tens of billions which can never be covered by whatever tax the economy might generate. that cannot continue.

        • realfish

          Not only did it inherit a massive deficit and massive accumulated debt to go with it, it inherited the poison pill of compounded interest on that debt and the on-going financial liabilities of Brown’s ‘client state’ .

          I often wonder whether the Tories, after the 2010 election, should have resisted reaching out for Government but should have allowed Brown (with Clegg) to get on with it and keep digging. An autumn 2010 / Spring 2011 election would surely have given Britain a majority Conservative government with it and a more assertive approach to tackling the deficit.

          • the viceroy’s gin

            The Cameroons didn’t want a conservative government. They wanted a Conservative government, meaning a leftist government.

        • Grrr8

          There is no agreement on how big the structural vs cyclical deficit is. It is after all an estimate.
          Sent from my iPad

          • HJ777

            There isn’t, and couldn’t be, an exact figure for the size of the structural deficit as it isn’t possible to definitively distinguish between every structural and every cyclical factor.

            However, that doesn’t mean that there isn’t general agreement on the approximate magnitude. There is a great deal of consensus about this – and everybody, except Ed Balls, agrees that it is large – between 3% and 7% of GDP. The IMF has recently estimated at the high end of this range. This is the legacy of the last Labour government.

            • Grrr8

              A range of 3-7% is not that useful a consensus when the govt’s overall deficit is at 6%. I also would like to see the evidence of “everyone agrees”. I don’t see Portes, Martin Wolf, Simon Wren-Lewis, Blanchflower, Adam Posen – all mainstream figures – supporting Osbornes deficit reduction schedule.
              As well, the point of structural vs cyclical is a steady state argument. Does not address issue of whether we borrow past cyclical limits now to make up for private de-leveraging to get the overall economy back to steady state (which should be Balls position). Though I am not a macro expert so I await insight.
              Sent from my iPad

              • HJ777

                There’s not much point trying to have a rational discussion with anyone who thinks that the likes of Blanchflower are “mainstream” – he’s a politically-motivated polemicist in the vein of Toynbee, not a serious economic commentator.

                The IMF recently estimated that we had a structural deficit before the bust of around 7% of GDP. Given that the deficit was round 3% of GDP at the height of what everybody knows was a huge and unsustainable credit boom, that seems around right to me. Who could argue that it wasn’t greater than 3% of GDP given that we were at the high point of the cycle?

                • Grrr8

                  Umm this is the same IMF that also stated that multipliers were much higher than earlier estimated and thus the govt’s austerity programme was too far and too fast??
                  I’m amused that you think I’m below rational discussion but you do reply!

                • HJ777

                  The IMF said nothing of the sort.

                • Grrr8

                  I guess you’ll just make it up as you go along right?

                • HJ777

                  Very, very , weak reply.

                  You can provide no evidence the IMF said anything of the sort, for the very simple reason that it didn’t, despite the selective misreporting in publications such as The Guardian. In fact, the IMF has consistently broadly endorsed the government’s approach (I am far more critical of it than the IMF is).

                  It is also glaringly obvious that you cannot explain how, when the government was running a deficit of ~3% of GDP at the height of the economic cycle (during what absolutely everybody acknowledges was an unsustainable credit boom), that the structural deficit could possibly have been less than 3% of GDP? In fact, you won’t even address the issue, instead accusing me of ‘making things up as I go along’. How is asking you to answer a straightforward question ‘making things up’?

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        In addition Fuel Prices and Energy Prices act like tax increases. Simply look at a chart of domestic gas prices since 2007 and consider that 41% electricity is generated from gas.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Prices of Gilts are at historic highs – 300 year highs – only one way to go

    • HooksLaw

      Correct – hence the need to ‘rebalance the economy’. Under labour people were anaesthetised by rising property prices and borrowing by taking money from their property. Furthermore saving for pensions – anything – dried up.

      Labour provided an economy drunk on borrowing and left it sinking in a sea of debt, torpedoed by its inept banking regulation.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Rubbish. Those appreciating houses were collateral for SME loans and also secured against SIPP and Personal Pensions to cover the Principal Repayment on Interest-Only Loans. The picture you paint is so simplistic as to be fatuous. EVERY ASSET was secured against LOANS including Bundesbank Gold in the Bank of England. That is the problem. Not the fact that Debt was accrued but that it was secured many times over on the same Collateral and the Collateral is collapsing

        • 2trueblue

          Go and do a stint at the CAB and you will find that HooksLaw is correct. Remortgaging was used to finance holidays and new cars. The level of debt amongst those retiring and the elderley is far in excess of what it should be, considering the ‘benign’ economy over 13yrs of Liebore, and the so called strong economy. Lots of money swishing around and not just the government suffering from financial incontinence.

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      The biggest increase in jobs was in Nursing Care and Hairdressing

      • Gareth

        Because it’s not as if there are more old people to take care of. Oh, wait…

  • http://twitter.com/jayuux jason green

    The voters already realise that it is virtually impossible for anyone to be any worse than Osborne. Even you lot at the Speccie know it to be true,but just can not bring yourselves to admit it.

    • Colonel Mustard

      I’m a voter and I know that Gordon Brown’s gang on the opposition front bench is far worse. Don’t confuse the state of the economy with Labour propaganda and pipe dreams. It’s always easier to win the game if you are heckling from the sidelines rather than playing on the pitch.

    • http://twitter.com/Shinsei1967 Nick Reid

      The voters may be wrong but they don’t happen to realise this.

      The latest YouGov polls showed 77% believed that our current economic stagnation is due to a combination of Labour’s legacy, the EUzone crisis and weak banks. Only 23% blamed Osborne’s cuts.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        On 6% know Osborne is increasing the National Debt by 60% in 2010-2015 far exceeding Gordon Brown’s 13 year record

        • http://twitter.com/MisterQuintus Tony Quintus

          But everyone knows that the debt is only increasing becuase Osbourne cannot cut the £160billion (FY2009/2010 values, more like £181billion in todays figures) structural defecit which Labour left behind in one giant chunk without killing the economy outright overneight.
          Labour was borrowing 23% of all government spending, accounting for 11% of total UK GDP, this is not a problem which can be solved quickly, and it is not a problem which Labour can avoid the blame for.

    • Davey12

      Dave and George are just doing what Brown was doing.

      The worlds biggest bubble went pop. Every country in the planet is printing money and manipulating there currencies. All trying to stop their own people from being thrown onto the dole queues. Dave and George have been doing the same.

      We also have a welfare state that costs in the region of £300 billion pounds a year. We have millions living on welfare and a similar number providing services for the poor.

      To get competitive means devaluing the pound to a point that people can afford our products. This means we will all have to take a drop in living standards. That means that every worker will see there standard of living fall. The left, Ed, Balls and Labour have said they will increase benefits in line with inflation.

      That means those on benefits will get richer, like happened under Balls and Brown before, while those working will get poorer.

      Of course increasing taxes means you are taking the money required for investing in the future to spend today.

      So all in all something will have to give.

      That fact lefties cannot see this shows why they are unsuited for government at any level.

      • HooksLaw

        Welfare does not cost 300 billion.

        Welfare is about 117 billion.
        Health is 121 billion
        Pensions is 127 billion

        The govt are being criticised for cutting benefits so what you say is cobblers.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Housing Benefit is £20 billion and comfortably exceeds the £5 billion spent on Unemployment Pay, but then again much of Housing Benefit is to subsidise low wages into high rents because employers seem unable to pay market rates of pay in this low-wage low-productivity economy

          • Davey12

            NO.. Brown decided to target tax credits at working people. It is not a subsidy for companies because they did not want and do not get it.

            As for rents, inviting millions into a country and fail to build houses for this increase in the population is stupid and of course will force up rents. Allowing asylum seekers to rent £1 million properties in London will also force up rents. Many immigrants will share 10 to house sending as much money back home as possible. Means landlords can charge large rents. Means house prices in the south east are rising.

            Labour really hates the white working class. Socialists are just plain stupid.

        • Davey12

          Lets see Education is about a 100 billion,. NHS is about a 100 billion add in Legal aid and policing and MOD and all the other stuff these guys get for free. This is all a cost that we have to pay for, You, like most, just added up the direct cost.

    • Makroon

      Really ? Balls ? Cable ? One of Farage’s flunkies ? Lucas !?

  • Daniel Maris

    There is the issue of what you use the money for.

    For instance, if you divert money towards poorer people in the country, you will do more to stimulate the country than if you give tax breaks to the rich (who will spend them on extra holidays and second homes abroad).

    However, I think your analysis is correct in the sense it is not really about the money. It has been much more about mood than money. Osborne launched an attack on the public sector for political reasons. He could for instance have chosen to put a freeze on public sector recruitment but preferred to create an austerity atmosphere in which the foundations of the public sector could be chiselled away at. The result? Panic about job security spread through workers in the public sector and then to family members dependent on public sector salaries and then into job areas where people were dependent on public sector expenditure. This collapsed consumer confidence, which damaged the retail sector in particular and led to further retrenchment.

    • Jules

      Your first paragraph was spot on.

      People need to realise, increasing the income of the lowest paid stimulates the economy more than giving to the highest earners. It’s why it’s a massive failure to do what Osborne has done, cut the 50p and taxes at the top whilst simultaneously cutting benefits, child benefit, tax credits and introducing VAT rise, bedroom tax etc. The richest do not spend their money immediately because they already had enough money in the first place to buy their needs and wants. The lower income people spend everything they have because they have to, so when lower income people get more money they spend it and it increases demand and stimulates the economy, when wealthy people get tax cuts they don’t. reducing what those on benefits have to spend as this Government has done is economic insanity.

      • Andy

        Osborne has not ‘cut’ benefits. He has just slowed their growth. And you should understand that to pay all these goodies like child benefit the Chancellor has to borrow the money.

        What we need is radical tax and spending reform. Cut Corporation Tax and abolish Capital Gains Tax and lets get investment flowing into business, fuelling jobs and tax revenue.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Raise Corporation Tax and give huge tax allowances for INVESTMENT. Lawson changed the tax system to favour financial organisations by taxing Cashflow rather than Profits and abolished CapEX Allowances thus reducing GFCF in the British industrial base so that now it has decrepit equipment and is way behind Asia and increasingly Central Europe and Turkey. We should be importing fewer German cars and more German machinery

      • Radford_NG

        As they say: money is like cr*p :productive if spread thinly ;toxic if piled-up.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        So increase Benefits so women with 11 children can save another horse from the burger bar ! The problem is that low-income is often a result of being children-rich and not working. We do not need them consuming more iPads. We need production to add value with rewards flowing to risk-takers.

        • Daniel Maris

          That’s a different, structural problem. We need to construct a welfare system that doesn’t immediately pay out to young women who give birth and which does have an upper limit on child support.

          It’s not that difficult. Women are perfectly rational in that sort of way – more so than men when it comes to children. If they are told the only way you will get that council flat is to work for five years first and that the alternative is to have the state (social workers) as co-parents, checking up on your parenting as a legal right, they will soon alter their behaviour. Similarly the vast majority will not seek to go beyond three children is that was made the upper limit (an upper limit in the sense that beyond that they would have to prove their ability to support the fourth child or the state would take over custody of the child).

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            You live in a world of fantasy. the Child in English Law has a right to support and that is what this mother counts on. She pushes the CSA aside by claiming violence if the fathers are forced to pay. You are focusing on the old cobcept of the Mother and modern English law works on The Child using the Children Act

            • Daniel Maris

              No, I am working on the principle of children’s rights. There should be a legal framework that says it is a child’s right to be brought up in a household where the adults are prepared to support themselves and the family. Where that isn’t the case, the state will step in but with solutions e.g. close parent monitoring, that the adults won’t like. The adults won’t like it for instance if they are subject to drug checks, household tidiness checks. Child Benefit won’t seem like a free ride then.

          • the viceroy’s gin

            Yes, you socialists are always desperate to take custody of the children, aren’t you?

            So the plan is death panels, windmills and state custody of children, that it?

            • Daniel Maris

              I don’t think it’s unreasonable if you have druggie parents who won’t work but want the state’s support to raise their children, to say well – sorry – the state is going to take an interest in those children.

              Libertarian politics doesn’t work when it comes to children – unless you are prepared to let children suffer.

              • the viceroy’s gin

                Yes, far better to have fascist authoritarianism.

                To include confiscating children from families.

                I guess the camps would be opening at about that same time, eh?

                They’ll be windmill powered, no doubt .

      • andagain

        People need to realise, increasing the income of the lowest paid stimulates the economy more than giving to the highest earners.

        You can do that just as well by cutting income taxes on the low paid, rather than by increasing their benefits. In fact, cutting income taxes should be much more effective because it would cut the effective marginal rate of taxation at the bottom of the income distribution.

    • HooksLaw

      Osborne ‘launched an attack on the public sector’ because we cannot afford it. Labour added nearly a million public sector jobs.
      Labour left a massive structural deficit. This was made worse because a chunk of its income it thought was permanent proved to be illusory – ie bank taxes.

      • Daniel Maris

        No one I know of is suggesting that no slimming down of the public sector payroll was required. But there are ways of doing these things, just as there are ways of evacuating a theatre without shouting “FIRE!!!”

      • http://twitter.com/jackmustard1997 jack mustard

        The public sector represented 19.6% of the workforce in 1997 and 19.7% of the workforce in 2008. Labour’s structural deficit is Osborne’s structural deficit: in September 2007, George Osborne said, ” Today, I can confirm for the first time that a Conservative government will adopt [Labour] spending totals. Total government spending will rise by 2 per cent a year in real terms …. under a Conservative government.”

        • Colonel Mustard

          Dishonest as the workforce is a changing total too – but typical for Labour’s online rebuttal trolls. ONS shows that the size of the total public sector rose steadily from 1999 from 5.5 million to over 6 million in 2005/6 then dropped slightly and flatlined at 6 million until there was a sharp increase in 2008 to 6.3 million. Then another rise to almost 6.5 million during Brown’s “scorched earth” emptying of the treasury which was almost exclusively within public corporations and central government. Those statistics do not include Brown’s bloatation of the socialist NGO quangocracy which is subsidised by taxpayer funding and in cost vs output could be considered as good (or perhaps as bad) as the public sector. Another measure is the public sector as a percentage of GDP – not good for Labour’s record either.

          Labour’s growth strategy is always towards the single party state and funding “improvement” (stuffing everything full of socialist fellow travellers at maximum taxpayer expense and minimum taxpayer benefit) for ideological purposes.

          Go and peddle your Labour lies elsewhere.

        • dalai guevara

          Did you add RBS employees to your public sector calculations?

          • http://twitter.com/jackmustard1997 jack mustard

            No – but Nicholas did (his “sharp increase” in 2008). However, he failed to account for the substantial increase in the total workforce – so presenting the data as he did is misleading. The data I presented is factual, so his characterising it as “Labour lies” is blatant dissembling.

            • Colonel Mustard

              Why do you think it adds anything to your comment (apart from being mildly creepy) to refer to Colonel Mustard as “Nicholas”? Do you think it gives some special advantage to your argument? You once berated me that your suspicious pseudonym is your business. Apparently you do not practice what you preach – which is consistent with Labour and its advocates generally of course.

              The figures I gave were in millions, not %, so not dissembling after all. The public sector was “grown” under Brown.

              • http://twitter.com/jackmustard1997 jack mustard

                Because you are a hypocrite, Nicholas. As “Nicholas” you implied that you were no longer posting here because you were, “bored, very bored” – all while you were posting under your new identity. And it was you who said, “comments [should] be made with genuine first names… most of the trouble seems to emanate from those hiding behind pseudo-names.” As for you dissembling: (i) you accused me of lying, when the evidence I presented is correct; (ii) you presented your figures in raw numbers – so yes, the number of public sector workers increased, but the increase was virtually in line with the increase in the total workforce; (iii) you then talk about a “sharp increase” in the number of public sector workers in 2008 without acknowledging that was almost entirely down to the nationalisation of a large chunk of the banking sector.

  • David Lindsay

    He doesn’t need to say anything.

  • the viceroy’s gin

    I suppose you Speccie teenagers hope people see it that way.

    “It could be worse”. I’m sure such strong, powerful political messaging warms your Cameroonian cockles in this bleak winter.

    However, I suspect conservatives are going to see you types and your Cameroonian heroes as failures, with this as further proof.

    • Makroon

      Any comment on “dictator Farage” and his surrounding crowd of “sycophantic cronies” yet, old chap ?

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