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Friday, June 17, 2011

Balls gambles with our economic future

Ed Balls call for a temporary cut in VAT was an audacious move to get him onto the front pages. However, in the cold light of day it looks ill-judged and opportunistic. Don't take my word for it.

The Guardian, who one would normally expect to support such a move is very luke warm:

But this is a case of right diagnosis, wrong prescription, because a cut in VAT, as Mr Balls proposed yesterday, makes sense only if one wants to shovel £2.5bn a month out of the Treasury as fast as possible. That is costly for a policy whose effect might be drowned out by higher inflation. More sensible and politically adept might be to bring forward a public infrastructure project in an effort to create jobs. The big job for Labour, though, is not to dream up a couple of policies but to work out a cogent position on the deficit. No sign of that yet.

The Financial Times reports that Mr. Balls has a credibility problem in his own party:

Some former Labour ministers privately believe Mr Balls’ speech is another manifestation of a tendency to “deficit denial”.

One said: “As David Miliband said last year: sometimes Labour offers too much and asks too little.”

Not quite the impact he was hoping for really.
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