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.
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.
