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.

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.