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Osborne's policies have done long-term damage to economy, claims Balls Osborne's policies have done long-term damage to economy, claims Balls
(14 days later)
The shadow chancellor, Ed Balls, warns that the UK could be approaching an "unsustainable recovery", and that George Osborne's policies have done long-term damage to the economy.The shadow chancellor, Ed Balls, warns that the UK could be approaching an "unsustainable recovery", and that George Osborne's policies have done long-term damage to the economy.
In article for the Guardian, foreshadowing Labour's autumn response to the growing signs of economic recovery, Balls continues to call for a £10bn infrastructure investment package.In article for the Guardian, foreshadowing Labour's autumn response to the growing signs of economic recovery, Balls continues to call for a £10bn infrastructure investment package.
Along with the shadow chief secretary, Rachel Reeves, Balls says that Conservative claims of a recovery will ring hollow with most voters. He says the next election will be fought around the issues of a recovery for all not just for the rich.Along with the shadow chief secretary, Rachel Reeves, Balls says that Conservative claims of a recovery will ring hollow with most voters. He says the next election will be fought around the issues of a recovery for all not just for the rich.
Reeves, in a speech to the Resolution Foundation, will announce plans to generate living wages, saying: "We are in the midst of a crisis of living standards and working conditions that is set to continue till the election for the majority of families because it the product of an unfair and unbalanced economy that is not working for the majority of working people.Reeves, in a speech to the Resolution Foundation, will announce plans to generate living wages, saying: "We are in the midst of a crisis of living standards and working conditions that is set to continue till the election for the majority of families because it the product of an unfair and unbalanced economy that is not working for the majority of working people.
"Deep problems in the way our economy has been developing – or, more accurately, not developing – over the past few years are resulting in stagnant real wages and increasing insecurity for the majority.""Deep problems in the way our economy has been developing – or, more accurately, not developing – over the past few years are resulting in stagnant real wages and increasing insecurity for the majority."
The co-ordinated Reeves-Balls assault came as the Resolution Foundation released figures showing the economic downturn had pushed a further 1.4 million employees below the living wage, the rate set as necessary for a basic standard of living in Britain.The co-ordinated Reeves-Balls assault came as the Resolution Foundation released figures showing the economic downturn had pushed a further 1.4 million employees below the living wage, the rate set as necessary for a basic standard of living in Britain.
The Resolution Foundation's study, entitled Low Pay Britain 2013, shows that 4.8 million Britons (20% of all employees) earn below the living wage, a leap from 3.4 million (14%) in 2009 at the height of the recession.The Resolution Foundation's study, entitled Low Pay Britain 2013, shows that 4.8 million Britons (20% of all employees) earn below the living wage, a leap from 3.4 million (14%) in 2009 at the height of the recession.
There have been signs that the Tories are interested in increasing the minimum wage as well, partly to minimise the impact of the Labour assault on living standards.There have been signs that the Tories are interested in increasing the minimum wage as well, partly to minimise the impact of the Labour assault on living standards.
The Balls intervention came as the OECD, the Paris-based economic thinktank, predicted that UK growth would this year reach 1.5%, almost doubling the May prediction of 0.8%.The Balls intervention came as the OECD, the Paris-based economic thinktank, predicted that UK growth would this year reach 1.5%, almost doubling the May prediction of 0.8%.
At the time of the March budget the Office for Budget Responsibility predicted growth in 2013 of only 0.6%. Surveys also showed the best manufacturing output rises since 1994.At the time of the March budget the Office for Budget Responsibility predicted growth in 2013 of only 0.6%. Surveys also showed the best manufacturing output rises since 1994.
Such figures have led some Tory MPs to claim privately that the recovery will put David Cameron on a smooth path to an election victory.Such figures have led some Tory MPs to claim privately that the recovery will put David Cameron on a smooth path to an election victory.
In his Guardian article, his first assessment of the state of the economy since his return from the summer break, Balls insists that risks to a recovery remain, citing the issue of prices rising faster than wages, and warns that the Treasury must not take recovery for granted.In his Guardian article, his first assessment of the state of the economy since his return from the summer break, Balls insists that risks to a recovery remain, citing the issue of prices rising faster than wages, and warns that the Treasury must not take recovery for granted.
External risks include the slowing Chinese growth, rising oil prices and a eurozone stuck in slow growth.External risks include the slowing Chinese growth, rising oil prices and a eurozone stuck in slow growth.
He also points out: "Two quarters of positive growth does not begin to repair the damage from three years of flat-lining."He also points out: "Two quarters of positive growth does not begin to repair the damage from three years of flat-lining."
Balls also refuses to backtrack on his claim that Osborne has made the economy worse by "gambling that faster tax rises and spending cuts would boost private investment and growth".Balls also refuses to backtrack on his claim that Osborne has made the economy worse by "gambling that faster tax rises and spending cuts would boost private investment and growth".
He says: "This failure has done long-term damage: youth unemployment at almost a million, business investment lost and deficit reduction stalled. It will mean tough decisions on public spending for Labour in the next parliament."He says: "This failure has done long-term damage: youth unemployment at almost a million, business investment lost and deficit reduction stalled. It will mean tough decisions on public spending for Labour in the next parliament."
Growth was still dragged down by domestic fiscal policy; he argues that there is plenty of room for stronger growth, suggesting quarterly growth of 1.4% is needed just to recover ground lost since 2010.Growth was still dragged down by domestic fiscal policy; he argues that there is plenty of room for stronger growth, suggesting quarterly growth of 1.4% is needed just to recover ground lost since 2010.
He writes that despite signs of stronger than expected growth he continues to believe in the position of the IMF "which has urged the UK to act now to support economic recovery by bringing forward £10bn of infrastructure investment". He adds: "This would allow us to build 400,000 affordable homes, create over half a million jobs and make our economy stronger for the long term."He writes that despite signs of stronger than expected growth he continues to believe in the position of the IMF "which has urged the UK to act now to support economic recovery by bringing forward £10bn of infrastructure investment". He adds: "This would allow us to build 400,000 affordable homes, create over half a million jobs and make our economy stronger for the long term."
He also calls for a long-term plan to deliver the right kind of growth, saying ministers "have no plan for a balanced and sustained recovery that can last; over the last three years both UK business investment and exports have underperformed".He also calls for a long-term plan to deliver the right kind of growth, saying ministers "have no plan for a balanced and sustained recovery that can last; over the last three years both UK business investment and exports have underperformed".
Labour also thinks any recovery will not to be reflected in household living standards, so will prevent a feel-good factor seeping through to voters before they go to the polls in 21 months' time.Labour also thinks any recovery will not to be reflected in household living standards, so will prevent a feel-good factor seeping through to voters before they go to the polls in 21 months' time.
Balls points out that prices have risen faster than wages in 37 of the 38 months since the last election, adding that working people are on average almost £1,500 worse off a year since Cameron became prime minister.Balls points out that prices have risen faster than wages in 37 of the 38 months since the last election, adding that working people are on average almost £1,500 worse off a year since Cameron became prime minister.
In her speech, Reeves will also highlight new Commons figures showing that almost 60% of new jobs created since the spring of 2010 have been in lower paid sectors, such as retail and residential care, where median hourly pay is less than a quarter of the national hourly median. This contrasts with the record of the last Labour government under which such jobs made up about 25% of new jobs between 1997 and 2010.In her speech, Reeves will also highlight new Commons figures showing that almost 60% of new jobs created since the spring of 2010 have been in lower paid sectors, such as retail and residential care, where median hourly pay is less than a quarter of the national hourly median. This contrasts with the record of the last Labour government under which such jobs made up about 25% of new jobs between 1997 and 2010.
She will also announce that Alan Buckle, the deputy chairman of KPMG international, will conduct a review to consider how government can best help more employers pay more of their staff a living wage, including for example through the use of living wage zones.She will also announce that Alan Buckle, the deputy chairman of KPMG international, will conduct a review to consider how government can best help more employers pay more of their staff a living wage, including for example through the use of living wage zones.
She will call on the Office for National Statistics to look at publishing figures on household disposable income more promptly and frequently in order that those can be monitored alongside quarterly GDP figures. This would help to focus political debate and government policy-making on the way the benefits of growth are shared, she says.She will call on the Office for National Statistics to look at publishing figures on household disposable income more promptly and frequently in order that those can be monitored alongside quarterly GDP figures. This would help to focus political debate and government policy-making on the way the benefits of growth are shared, she says.
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