Ed Balls: Osborne must change tack and steer towards growth

Share
Related Topics

With the world in turmoil, global oil prices surging and the British economy faltering there is still time for George Osborne to pause before the Budget and ask himself: "Am I getting this right?"

The big mistake would be to weigh that question in terms of headlines, backbench cheers, short-term reaction of the markets, or worse, his 2015 election strategy.

Instead, I would suggest three tests for this Budget: whether it stops the recent rot on growth and jobs; whether it reverses falling living standards; and what vision it sets out for our long-term future.

First on growth and jobs, Mr Osborne says he has no choice but to cut the deficit as hard and fast as possible. I have consistently disagreed: it was a political choice to abandon Labour's plan to halve the deficit steadily over four years. By going deeper and faster than any other major economy Mr Osborne has imperilled the fragile recovery and driven unemployment to a 17-year high. Britain has been left with little flexibility to cope with the economic effect of events around the world such as the Libya crisis, a world oil price shock or the aftermath of the Japan earthquake. With slower growth and more people out of work, it will be much harder to get the deficit down.

So will he have the courage and common sense to rethink his deficit reduction plan? Will he repeat Labour's bank bonus tax to create jobs? Or will he dig the country deeper into the hole of stagnation?

Second, Mr Osborne should recognise his VAT rise is adding 3p to a litre of petrol and adding to inflationary pressures in the economy, forcing the Bank of England to consider a rise in mortgage rates. And it is his decision to give the banks a tax cut this year, while cutting services, tax credits and child benefit for families. They will not be satisfied with a cancelled fuel duty rise and re-heated announcements on income tax. They want – and Labour will demand – clear action to support household incomes.

But there is a third vital test for this Budget. Can Mr Osborne set out a credible vision of where our future jobs will come from? The financial crisis exposed the vulnerability of banks and the over-reliance of the British economy on financial services. And it accelerated the rise of India and China as competitors, not just in low-cost manufacturing, but top-class design and education, and attracting international investment.

The Government has boasted of a "big bang" Budget plan for growth. But what we have seen so far – tinkering with planning laws, reheating failed policies like enterprise zones and rowing back on workers' rights – looks like a damp squib.

We need to rebuild the strength and competitiveness of our banking and financial sector, but on the basis of business models that reward investment and sustainable growth, not short-term risk-taking.

We need a modern industrial policy that supports incentives for technological, green and scientific innovation to flourish, starting with boosting R&D tax credits for small companies. And with too many employers ducking the need to invest in skills, we must ensure every company takes their responsibilities seriously and every employee gets the chance.

I don't claim Labour has all the answers right now – but it is worrying that Mr Osborne shows no sign of even understanding the questions.

Ed Balls is the Shadow Chancellor

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Trainee Sales Consultants - OTE up to £35,000

£15000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Franchise Operations Manager - Midlands or North West

£40000 - £60000 per annum: Recruitment Genius: The position will be home based...

Recruitment Genius: Hotel and Spa Duty Manager

£18000 - £24000 per annum: Recruitment Genius: If you are friendly, sociable, ...

Recruitment Genius: Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This independent publishing and...

Day In a Page

Read Next
 

Daily catch-up: the Greeks can stay in the euro or end ‘austerity’, but not both

John Rentoul
The old 1,000 Greek drachma notes and current 20 euros  

Greece debt crisis: History shows 'new drachma' is nothing to fear

Sean O'Grady
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue