Response to the OECD’s Economic Outlook

Ed Balls MP, the shadow chancellor, said in response to the OECD’s Economic Outlook published today:

“A year ago, while the Chancellor was saying he was cautiously optimistic and Britain was out of the danger zone, I warned that there was a hurricane building and this was not the right time to rip out the foundations of the house. And I am even more worried now about Europe, America and Britain than last summer.

“This is now a critical moment for the world economy. We urgently need some leadership from our Chancellor and the G7 meeting this weekend to agree a global plan for growth and more balanced plans to get deficits down in the medium term.

“The deputy head of the OECD was right to warn earlier this year that there is merit in slowing the pace of deficit reduction if weak growth continues, as these latest forecasts suggest. The OECD is now calling for short term fiscal stimulus if needed, following warnings by wise voices including the new head of the IMF and the founder of the largest investment fund in the world on the danger that cutting too far and too fast threatens economic recovery.

“George Osborne should note that over the last twelve months the UK has grown more slowly than any G7 country other than earthquake-hit Japan, as the recovery was choked off by his decision to cut spending and raise taxes too far and too fast. And the forecasts for the next six months are extremely concerning with the UK set to grow more slowly than any G7 country other than Italy.

“As the IMF’s Christine Lagarde has rightly said ‘growth is necessary for fiscal credibility’ and without growth it will not be possible to get deficits down. We cannot afford for George Osborne to continue sitting on his hands and saying Britain will plough on regardless with a reckless policy that is hurting, but clearly not working.”

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Posted September 8th, 2011 by Ed's team