Balls fears UK could be hit by depression

Ed Balls

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Shadow Chancellor Ed Balls told Sky News that the UK could be on the brink of a depression as bad as the 1930s – if the Chancellor doesn’t change course on his deficit reduction plasns.

 

The know-it-all shadow finance minister claims that the coalition have room to change their fiscal policies, but won't, because, unlike the US, they are not facing a general election in the next coming year.

 

He claimed, as Labour politicians have done all the way throughout, that with their austerity package they had “slammed on the brakes” too fast, and are now paying for it with a flat lining economy, and rising unemployment.

 

His comments came as the new head of the International Monetary Fund hinted, only very slightly, that the UK had room for manoeuvre with their finance measures, but Christine Legarde did say that countries with huge budget deficits should still try to manage their debts sensibly. Britain, according to the Chancellor, has the hugest budget deficit in the G7, and has refused to do a u-turn on the coalition policy of tackling the budget deficit.

According to Balls, Tory Chancellors of the past, like Norman Lamont,  fell into the trap of not changing their course with their economic plans when they were not working, and ended up falling back into recessions.

 

Balls said that the Chancellor should be concentrating on cutting taxes, and putting more money in people’s pockets.

 

He responded to an OECD report yesterday, which said Britain should slow their pace of deficit reduction, :“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.”

 

Balls also told Sky News that the Chancellor’s plans were wreckless.

 

The new head of the IMF, also apparently said that growth was also an important factor in trying to nurse any ailing economy.

 

The economy has grown by just 0.2% over the last few months, according to the Office for National Statistics, and the Bank of England have kept interest rates at just 0.5% for the last few months as well.

 

Chancellor George Osborne has said though that the coalition economic plans are flexible enough to deal with changing tides in the economy.

 

The slow growth had been originally blamed in the last six months, due to the Royal Wedding, and Japan’s Tsunami, which hit car  part imports to UK.

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