Up and Coming: Balls questions King's cuts view

Monday, January 31, 2011

Balls questions King's cuts view

Ed Balls said Britain needed a plan which put jobs and growth first

Shadow chancellor Ed Balls has accused George Osborne of being in denial about the risks to jobs and growth from his plan to cut the deficit.

Writing in the Independent on Sunday, Mr Balls said the chancellor's plan to eliminate the deficit by 2015 was "irresponsible and dangerous".

It comes after figures revealed a surprise contraction of the UK economy.

Mr Osborne has told the BBC there would be "financial turmoil" if he abandoned his cuts and tax rises.

Their ongoing battle over economic policies intensified on Tuesday, when the latest GDP figures showed a shock 0.5% contraction in the economy in the final three months of 2010.

Forecasts had been for growth of between 0.2% and 0.6% but ministers blamed the negative figures on the snow and exceptionally cold weather in December.

In his article in the Independent on the Sunday, Mr Balls contrasted the growth figures in the US with the "shocking" figures in the UK.

"The US Treasury, by combining sustained and sensible stimulus for an economy still in recovery with a measured and steady pace of deficit reduction, has seen confidence grow and consumer spending rising," he said.

He said the US Treasury Secretary Tim Geithner had told the World Economic Forum in Davos this week that rapid and drastic spending cuts were "not the sensible way" to cut national deficits.

“There is an economically more credible alternative to what this Conservative-led government is doing.”

Ed Balls Shadow chancellorTurmoil if cuts scrapped: Osborne

He also pointed to the warning issued by the famous investment fund manager George Soros in Davos that the UK's austerity measures could push the country back into recession.

Mr Balls said "simply slamming on the brakes" with tax hikes and spending cuts was not a "credible economic policy".

"That is why here in Britain we need to re-think," he wrote. "There is an economically more credible alternative to what this Conservative-led government is doing.

"We need a plan that puts jobs and growth first."

Mr Balls accused the chancellor of being being complacent and "in denial" about the risks to jobs and growth of the squeeze on family budgets and public services.

"There is no historical precedent to support his projections and he has no Plan B if the scale and pace of his deficit-cutting prove to go too far and too fast."

Labour's plan - which Mr Balls had initially criticised as too aggressive - is to halve the deficit within four years.

In an interview on the BBC Politics Show, Mr Osborne insisted he had to take tough decisions to sort out the "enormously tricky situation" he had inherited and provide a platform for sustainable growth.

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