BoE Governor is now recognising what Chancellor refuses to – urgent action is needed to stimulate the economy

Ed Balls MP, Labour’s Shadow Chancellor, in response to speeches by the Governor of the Bank of England and the Chancellor at Mansion House tonight, said:

“The Governor is now recognising what the Chancellor still refuses to – that urgent action to stimulate the British economy is needed now that we are in a double-dip recession.

“The Bank of England’s new funding for lending scheme is a significant admission that the government’s existing policies have failed. Businesses will be desperately hoping it is more successful than George Osborne’s Project Merlin and credit easing schemes which have actually seen net lending to businesses fall.

“But when the biggest problems in our economy are a lack of confidence and a lack of demand, these proposals from the Bank of England do not go far enough. We need a change of course from the Government on fiscal policy too. A credible and balanced plan for jobs and growth that gets our economy moving again and people back to work is the only way we will succeed in getting the deficit down. And without urgent action now Britain will pay a very heavy long term price.

“George Osborne’s speech was dangerously complacent. He claimed Britain was safe in the global storm, even though we are now the only country in the
G20 except Italy in a double-dip in recession. And he is sticking with policies that have choked off the recovery, pushed up unemployment and are leading to £150 billion of extra borrowing.”

On changes to the objectives of the Financial Policy Committee also announced tonight, Ed Balls added:

“George Osborne has snuck out another u-turn tonight. Labour and business organisations like the CBI have been calling for the new Financial Policy Committee to have supporting economic growth as one of its key objectives. The Chancellor voted against our amendment on this but in the face of an imminent defeat in the House of Lords he has now backed down.”

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Posted June 14th, 2012 by Ed's team