Ed Miliband: Cuts plan has locked UK into vicious cycle

 

Ed Miliband says the government "no longer deserves the benefit of the doubt" on the economy

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Labour leader Ed Miliband has said that the government's economic strategy is locking Britain into a "vicious cycle on the deficit".

In a speech in London, he said next week's autumn statement will show their plan "has failed" and confirm a further rise in borrowing.

Flat growth and high unemployment means it is time to change course, he says.

Prime Minister David Cameron says Labour plans to spend more are the "height of irresponsibility".

Mr Miliband told the IPPR think-tank that next Tuesday's autumn statement - in which Chancellor George Osborne will present the official economic and public finance forecasts - will "mark a crucial moment in the economic course of our country".

Analysis

Tuesday 29th November 2011, 12:30pm: "It will be the moment that we learn that the biggest economic gamble in a generation has failed." So says Ed Miliband.

In a speech this morning he tried to present the case for an alternative. He started with the now familiar act of contrition for the failings of the last Labour government on bank regulation and support for manufacturing.

He knows he must try to rebuild his party's credibility on the economy.

Then he laid out a case - "I want to convince you" - for another way. It's based on what he said were George Osborne's four criteria: growth, jobs, low inflation and borrowing targets. On each, austerity has failed, he said.

Ed Miliband is focusing his attack on the set-piece event of next week's Autumn Statement because for him it represents the coalition's core failing - it's pushing ahead with the plan, irrespective of the effects.

"It will be the moment that we learn that the biggest economic gamble in a generation has failed."

The Labour leader said on jobs, growth and inflation, Mr Osborne's promises had come to nothing. Growth had flatlined since the final quarter of 2010, he said, while unemployment had been growing since March 2011 while CPI inflation had been above 4% all year.

And on borrowing, he drew attention to the Office for Budget Responsibility's March prediction that £44.5bn of additional borrowing would be needed up to 2015-16 and suggested the figure was now forecast to surpass £100bn.

"When a further rise in borrowing is confirmed by the Office for Budget Responsibility next week, it will be a catastrophic blow to the government's credibility," he said.

Mr Miliband appealed to voters who backed the Conservatives at the general election, because they believed their deficit-reduction plan was right, to "look afresh at the evidence".

He said that the reason the government "no longer deserves the benefit of the doubt, is that even on this measure - the central test they set themselves - the plan isn't working".

"It isn't working because their failure to get businesses growing, to see more jobs created, has locked them and the country into a vicious cycle on the deficit," he said.

'Chilling effect'

"We need to ask why, when the recovery was underway just 17 months ago, we have ended up in such a serious situation."

He said the government was wrong to blame the eurozone crisis for slow growth - it was the "scale of shrinking domestic demand" that was holding growth back.

Start Quote

Is there a single other mainstream party anywhere in Europe who thinks the answer to the debt problem is more spending and more borrowing?”

End Quote David Cameron

"Austerity rhetoric" had had a "chilling effect on our economy", he said - and suggested the government was "shrugging its shoulders in the face of economic difficulty".

Those who criticised Labour's "five point plan" to boost economic growth - which would include a VAT cut and a bank bonus tax to fund youth employment programmes - for being too expensive should think again, he added.

"The cost of not acting is the more expensive choice - economically and socially. That is proved by the government missing its borrowing targets by over £100bn."

Earlier this week Prime Minister David Cameron told business leaders: "Getting debt under control is proving harder than anyone envisaged."

But he criticised Labour's plans for the economy at prime minister's questions on Wednesday, telling Mr Miliband: "Is there a single other mainstream party anywhere in Europe who thinks the answer to the debt problem is more spending and more borrowing?

"If you are worried about the level of debt, why are you proposing to add another £100bn to it? It is the height of irresponsibility and the reason why people will never trust Labour with the economy again."

Office for National Statistics figures out on Tuesday showed the UK's public sector net borrowing, excluding financial interventions, fell to £6.5bn in October - down from £7.7bn a year earlier - which the Treasury said showed Britain was making progress in cutting its deficit.

 

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  • rate this
    +5

    Comment number 161.

    As bad as things are, I hate to contemplate what things would be like if we had continued with Labour post-May 2010. They'd already run out of other people's money to spend and their inability to control public sector spending would likely have driven us off the cliff.

  • rate this
    +2

    Comment number 160.

    Banking crisis leads to
    credit crisis leads to
    fiscal crisis leads to
    sovereign debt crisis leads to
    currency crisis leads to
    political crisis leads to
    REVOLUTION OR WAR

    Neither Cameron nor Milliband will resolve this because neither are addressing the ROOT cause - CAPITALISM

    ...and I hear upheaval of the system is apparently too much for the timid British public

    You get what you vote for

  • rate this
    +1

    Comment number 159.

    @ 140. anotherfakename .....Bravo! Yes, we need to buy British, and it would help too if we didn't have so much VAT on everything!

  • rate this
    +5

    Comment number 158.

    Don't people realise that governments don't have any money - they just tax us or borrow it on our behalf.

    Therefore, every penny cut is a penny more in our pockets to spend on what we want. Otherwise polititians will waste it on their next stupid scheme to get themselves re-elected.

    And I am perfectly capable of wasting my own money thank you.

  • rate this
    -3

    Comment number 157.

    There is no confidence in this government and its reckless actions on the economy. Let the elections begin!

  • rate this
    -6

    Comment number 156.

    In the recent Spanish general election, the right wing PP party had no specific solutions to offer. They won, now they are looking very scared, & just saying, "well, we did not make any promises".

    Happily, too much has happened in the whole world for them to just sit about blaming the previous Labour party for all the problems. Only the UK Tories use that as a bogus get out of jail free card.

  • rate this
    0

    Comment number 155.

    I thought this was thoughtful piece by Ed judging the economy on the targets set by GO in his first emergency budget. It is about time that Labour really started to argue against the Government using their own figures. Time will tell who is right. Having lived through the recessions of the 70's, 80's and 90's all of the Governments refused to change course right up to the day before they did.

  • rate this
    0

    Comment number 154.

    More stimulation is the key for the future.

  • rate this
    -5

    Comment number 153.

    Unfortunately Ed Milliband is not the best spokesman for his party. David would have made a much better leader. However, what Ed says is right. The solution is not to cut for the sake of cutting, but to cut carefully and in the right places. The Tory's policy will cost more in the long term and will make us borrow even more than if we'd cut sensibly!

  • rate this
    +6

    Comment number 152.

    Ed and Ed just dont get it. We dont have any money. His party spent it all and then it all again. We have to borrow from the rest of the world just to pay our bills.

  • rate this
    +2

    Comment number 151.

    @SoT
    I didnt say we should carry on borrowing.

    'If we didn't cut and were unable to pay off our debt and defaulted ALL public services would be shut.'

    That might still happen I am afraid.
    My point is that the whole system is broken and it is quite possible that this much will become horribly apparent before long. Like when the first core euro member defaults.
    Peace.

  • Comment number 150.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 149.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 148.

    Global debt has grown from 80 trillion dollars to 210 trillion dollars. Global credit market debt has grown at 12% but global GDP has grown at 4%. Apparently the only solution is massive debt restructuring not tinkering with a few bilion. These are a few of the facts from this excellent interview.
    http://www.bbc.co.uk/iplayer/episode/b01771pd/HARDtalk_Kyle_Bass_Founder_Hayman_Capital_Hedge_Fund/

  • rate this
    +1

    Comment number 147.

    @MEMEMACHINE

    You sound very much like my housemate. If we didn't cut and were unable to pay off our debt and defaulted ALL public services would be shut. You clearly agree with Miliband, the squeezed middle is an expression he came out with and doesn't even really realise what he means. I'm sure the middle class can do without brand new coffee-makers for a while.

  • rate this
    +2

    Comment number 146.

    I fail to see why anyone should agonize over comments by Ed Milliband as he was not voted into office by either his political party members or Labour MP's but by the unions. Why not just publish the unions views instead as they determine what Ed says.

  • rate this
    -3

    Comment number 145.

    As an ICT teacher in England there are no teaching jobs, no plans to create jobs and the Teacher Training has all but stopped because of Tory Cuts. This is before any mention of pensions. How can a Country in the 21st Century effectively eliminate IT and Computer Studies because of "Cuts" and pretend to remain competitive for the future? Imbecilic Etonians get out of politics you have no clue!

  • rate this
    +6

    Comment number 144.

    erm bigolbear - when tyou reach your credit card limit and they wont raise your limit and you cant borrow any more you have no choice but to stop spending. you make a good analagy and thats exactly whats happened to greece, portugal, ireland and maybe spain and italy - would you like it to be the uk next?.

  • rate this
    +3

    Comment number 143.

    @135. 'The cuts maybe painful but are essential.'

    i) Painful to whom? ii) Essential to whom? Therein lies the issue.

    I will get you started:
    i) The poor and the squeezed middle and anyone who relies on public services, like children, vulnerable women and the elderly.
    ii) Bond markets, banks, hedge funds and anyone else with an interest in the continuation of the international bond ponzi.

  • rate this
    +7

    Comment number 142.

    Wasn't Milliband a member of the previous Government that got us into this mess? More absolute poppycock from an ego freak!

 

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