Education Minister Ed Balls apparently told a meeting of the Yorkshire Labour Party this weekend that Britain was facing ‘the most serious global recession for over 100 years’ – i.e. worse than the Depression of the 1930s, when UK output tumbled by about 5%. That’s by far the gloomiest assessment we’ve heard from the Government to date – and what makes it particularly alarming is that Balls is Prime Minister Gordon Brown’s protégé, not to mention his closest ally on the front bench. What happened to those green shoots of recovery?
‘This is a financial crisis more extreme and more serious than that of the 1930s,’ Balls told the meeting, arguing that the economic situation will shape the political landscape in the coming years, just as it did back then. Balls has apparently since claimed that he was being no more pessimistic than other commentators – such as the Bank of England’s Charlie Bean, who said in October that this was ‘a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history’. However, Bean isn’t an elected politician, with some responsibility for maintaining public morale. And Number Ten didn’t appear to see it that way, judging by their subsequent backtracking. ‘He is not suggesting the impact on the real economy here or elsewhere will be worse than the 1930s,’ a Brown spokesman told the FT. Now why would we have thought that…?
Naturally the Opposition have leapt on this gleefully, particularly since the PM has previously accused them on several occasions of ‘talking the economy down’. It was bad enough when Brown accidentally used the word depression (instead of recession) last week; now Balls has given them a heaven-sent opportunity to put the boot in. Shadow Treasury Minister Philip Hammond described the remarks as ‘staggering and very worrying’, adding: ‘Is Ed Balls spilling the beans here and telling us that the government sees the situation as slightly more serious than they have tried to portray?’ If nothing else, we can’t see how this kind of comment is going to do the situation any good at all.
What’s more, as Lib Dem Vince Cable pointed out, it’s a bit confusing for the public when one Labour minister (Baroness Vadera) talks about green shoots of recovery, and another talks about the worst recession for a century. ‘Government ministers are oscillating between complacent optimism and this doom-laden picture of Armageddon. Surely the truth lies between the two?’ We hope he’s right and Balls is talking... well, rubbish.
In today's bulletin:
HBOS and RBS chiefs say sorry for ignoring risks
JJB calls in the administrators after retail shoeing
Ed makes a Depressing Balls-up
Harriet Harman: No more sexism in the City
Editor's blog: Putting the world to rights in Portmerion