Why is it that some politicians and commentators, when faced with the financial disaster that is the European economy, put their fingers in their ears and sing la la la. Even politicians who should know better. Take Ed Balls for example. He and his boss, Ed Miliband, have thought up a five point plan to rescue the British economy. It involves creating jobs, building houses and cutting taxes. All paid for by a little bit more borrowing. Its as if public sector borrowing is a heroin addiction Balls just cannot kick.
This Government, Tory led, is borrowing more each month than we can afford. The last Government, Labour, was borrowing more each month than we can afford. The only reason we are not in a situation similar to Greece right now is that the Tory commitment to deficit reduction has allowed the UK to maintain low interest rates and a triple A credit rating.
Labour’s David Ellesmere proudly stands behind a banner proclaiming the emergency response Ed Balls prescribes for the British economy (note nothing there about not contributing yet more to Euro bail out funds) and says that this is a worrying time for families in Ipswich, worried about their jobs, struggling with rising bills (as inflation hits 5.2%) and their children’s futures. He is right.
What Cllr Ellesmere may not understand, or simply chooses to ignore, is that if the Government followed Labour’s plan, based on increasing the amount we’re borrowing, we stand a risk of losing our triple A credit rating. That would make it more expensive to borrow the extra money he wants us to borrow. It would mean interest rates rising. Which would mean more jobs going, more people being made homeless as mortgage rates rise. To increase our borrowing requirement beyond that which was budgeted for would push an economy teetering on the edge into an abyss of bankruptcy.
Mr Gummer has been very strong on reminding everyone who will listen that we are in the middle of one of the trickiest economic periods for a very long time. Deficit reduction is the over riding priority of the Government, taking precedence over every aspect of public life. To put it simply, as the outgoing Labour Chief Secretary to the Treasury did, there is no more money left. This country splurged on credit, expecting the bills to be paid off by future tax income from an ever expanding economy. The credit crisis of 2008 and the consequent recession, which we’re barely out of now, has led to those bills coming due whilst the country has much less income than it needs.
Labour will not be electable without a credible economic policy. Borrowing more money simply isn’t a credible economic policy. No matter how much the five steps proposed by Ed Balls and endorsed by David Ellesmere may appeal to the electorate, voters know that they can only pay for them with more of what got us here in the first place – fake money. Mr Balls, Mr Miliband and Mr Ellesmere have three and a half years to work out a real economic strategy to take us forward from 2015.