Balls on the flatlining economy

Responding to figures showing GDP growth of 0.5% in the first quarter of 2011 following the 0.5% contraction in the previous quarter, Ed Balls said:

“These figures show an economy that has flatlined since the autumn. By making a political choice to cut further and faster than any other major economy this Conservative-led government has choked off the recovery when it should have been secured and pushed up unemployment too.”

“In the six months since George Osborne’s spending review and VAT rise the economy has ground to a complete halt and not grown at all. In contrast, in the previous six months, the economy grew by 1.8%. Moreover the economy has flatlined before the bulk of the spending cuts and tax rises have kicked in.”

“Today’s figure is significantly lower than the Office for Budget Responsibility’s most recent forecast, which has already been downgraded three times. And these figures raise the very real possibility of the OBR having to downgrade its growth forecast for 2011 a fourth time.”

“If George Osborne thinks zero growth over six months is good news and a sign that the recovery is on track then he is more out of touch and out of his depth that I feared.”

“The Chancellor needs to get his head out of the sand. He doesn’t seem to understand that without jobs and growth you can’t get the deficit down. The slower growth, higher unemployment and higher inflation we now see under George Osborne means he is now set to borrow £46 billion more than he was planning to. That’s a vicious circle and makes no economic sense at all.”

“Families know that cutting too far and too fast is hurting, but now we know it’s not working either. George Osborne can’t keep making excuses – it’s not the wrong kind of snow that’s to blame, it’s the wrong kind of policies. He needs to think again before it’s too late.”

“Of course, after the biggest global financial crisis since the 1930s, every major country faces tough decisions to get their deficits down. Labour’s plan to halve the deficit more steadily over four years, in line with the G20 pledge, meant that a year ago the economy was starting to grow strongly, unemployment was falling and borrowing came in £21 billion lower than planned.”

“The warnings we and the Lib Dems made in the general election a year ago that putting up VAT and cutting spending on jobs programmes and school buildings in the last year would put the recovery at risk have now come true – although the Lib Dems have helped make those fears a reality. Before George Osborne ripped up our plan to halve the deficit over four years growth in 2011 was forecast to be 2.6%, but that now looks like an impossible prospect.”

“George Osborne needs to accept there is an alternative, as Labour has set out – reducing the deficit in a steadier way, putting jobs and growth first and repeating the bank bonus tax to build thousands of new homes, create over 100,000 jobs and support small businesses.”