Public spending cuts 'economically unsafe', says former minister

27 Aug 10
Labour leadership contender Ed Balls today warned that the government’s spending cuts were 'unfair, unnecessary and economically unsafe'
By Lucy Phillips

27 August 2010

Labour leadership contender Ed Balls today warned that the government’s spending cuts were ‘unfair, unnecessary and economically unsafe’.

In a speech in London’s financial centre, the shadow education secretary said the coalition’s deficit reduction plan risked plunging the UK back into recession. He condemned the speed of cutting public spending and welfare payments, claiming Chancellor George Osborne would ‘suck money’ out of the economy while increasing taxes. He said Osborne’s actions were ‘the equivalent of ripping out the foundations of the house just as the hurricane is about to hit’.

Balls added that even Labour’s pre-election policy to halve the deficit in four years was ‘too ambitious’. He said: ‘A slower and steadier pace is more likely to support jobs and growth, more likely to boost financial market confidence and likely to be fairer as well.’

Balls also claimed that economic figures published today by the Office for National Statistics vindicated Labour’s economic strategy of increasing public spending to combat the effects of the recession.

The ONS revised its growth figures for the second quarter of the year to 1.2%, up from an initial estimate of 1.1%. This was the fastest rate of quarterly growth for nine years, boosted mainly by a strong performing construction sector.   

The coalition government also used the data to defend its spending plans. A spokeswoman from the Treasury said: ‘While the government is cautiously optimistic about the path for the economy, the job is not yet done. The priority remains to implement the Budget policies which support economic rebalancing and help ensure the sustained growth that the Office for Budget Responsibility forecast this year and next.’     

At another event in London today, Deputy Prime Minister Nick Clegg said he expected UK economic recovery to be ‘choppy’, but added: ‘You can’t create growth on the shifting sands of debt.’

Ballots for the five-way Labour leadership contest will be sent out to party members and trade unionists next week. Balls is standing against shadow foreign secretary David Miliband, shadow energy secretary Ed Miliband, shadow health secretary Andy Burnham and backbencher Diane Abbott.

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