Response to speeches by the head of the IMF & the Chancellor

Ed Balls MP, Labour’s Shadow Chancellor, said in response to speeches by Christine Lagarde, managing director of the IMF, and George Osborne this morning:

“Christine Lagarde is right to repeat her warning that cutting too quickly will hurt the recovery and jobs and that there is scope for reducing deficits more steadily to support economic growth. This is clearly a message aimed squarely at America, the eurozone and Britain too.

“As I said yesterday it comes as no surprise that, despite those clear warnings, the IMF has diplomatically shied away from contradicting our Chancellor in public – at least for now. In my experience, the IMF’s message to Britain in private and at today’s G7 meeting will be rather more blunt.

“But even Ms Lagarde’s carefully chosen words are hardly the ringing endorsement the Chancellor’s advisers boasted they were expecting earlier this week. Because while George Osborne insists there can never be a change of course and we must plough on regardless, Christine Lagarde rightly warns Ministers will need to act if slow growth and high unemployment continues. As the IMF said earlier this year, one option would be temporary tax cuts and we have suggested temporarily reversing the VAT rise to help kick-start the economy.

“As the G7 meets this weekend this is clearly now a very critical moment for the world economy. But struggling families and businesses will be worried that our Chancellor complacently claims Britain is some sort of innocent bystander – even though our economy flat-lined well before the rest of the world slipped back into stagnation.

“In the G7 only earthquake-hit Japan has grown more slowly than the UK over the last year and in the next six months only Italy is forecast to grow more slowly than us. This is because tax rises and spending cuts which go too far and too fast have crushed confidence, choked off the British recovery and pushed up unemployment well before the recent global problems.

“Instead of keeping their fingers crossed and hoping for the best Ministers urgently need a plan for jobs and growth in Britain if we’re to get our deficit down. And we need leadership on the world stage from our Chancellor and Prime Minister to agree a global plan for growth.”

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Posted September 9th, 2011 by Ed's team