Ed Balls denies that he denied there was a structural deficit


(Actually, it’s worse than that, for in addition Ed Balls’s claim that it’s only with hindsight that it’s clear there was a structural deficit doesn’t really stand up to scrutiny either.)

* Mark Pack is Party President and Co-leader of the party. He is editor of Liberal Democrat Newswire.

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  • All part of Labour’s plan to reinvent reality on a continuous basis to fit its chosen argument of the day.

    The sad thing is that the voters are still lapping it up.

  • Andrew Tennant 26th Oct '12 - 5:16pm

    Proof, if anyone needed it, that Balls is either incompetent or a liar.

  • Tony Dawson 26th Oct '12 - 9:28pm

    The ‘denial denier’ is in denial! 🙂

  • Balls once again swimming in Egypt …

  • Andrew, “or” ? 🙂

  • Leekliberal 27th Oct '12 - 9:41am

    Ed Balls – the Lib Dems secret weapon. Let’s give the lad plenty of publicity !

  • Politician lies.
    And bears defecate in the woods…

  • David Thompson 27th Oct '12 - 10:55am

    There’s a fascinating article about the deficit in Huffington Post, here’s the link:


    Not for the first time I believe we have been sold a pup by the Coalition.

  • If Balls worked in a different sphere and had created the mess he did with the economy, he’d probably face trial rather than being shamelessly rehabilitated. It really is unbelievable that Labour cannot find a better shadow chancellor. Having Balls as shadow chancellor is rather like giving Savile his own kids TV show.

  • Perhaps it would be a more useful contribution if YOUR party took some of the responsibility for what YOUR party is doing in Government without these rather sad articles on contradictions made by a politician. All politicians have inconsistencies not least YOUR leadership and, even more, YOUR Government’s Prime Minister and Chancellor who are the experts on misspeaking and dissembling (using the ‘l’ word will get me modded I am sure)

    We hear today the shot across the bows due to the downgrading of the EHRC by the UN, the review of building regs, the continued attack on the poor and disabled and all we get is continued feeble attacks on Labour

    Labour made huge mistakes and were guilty of many things when in Government – for that we should continue to mistrust them and challenge them but YOUR party is in Government and can actually make a difference now.

    Perhaps stopping voting with the Tories for every one of their pet ideas would be a start.

    Alistair, if we are talking about Parliamentarians facing trial then I think any party who brings David Laws into Government after what he was up to should perhaps think twice about throwing rocks in that particular glass house

  • Bill le Breton 27th Oct '12 - 11:30am

    David T, you may be interested in a piece here https://www.libdemvoice.org/opinion-mind-the-gap-a-sceptical-view-of-the-need-for-cuts-30919.html followed by a its thread.

    There was much uncertainty about the size of the output gap in the spring of 2010 and therefore about the size of the structural deficit. People including the IMF have recently revised their opinions.

    This uncertainty also surrounds the size of the output gap existing now, which is directly influencing decisions about the extent of the ‘cuts’ required in the Autumn Statement, or so it should be if the Coalition is keeping to the terms of the Coalition Agreement which refers to elimination of the structural deficit – not as is sometimes stated, the elimination of the deficit as a whole, and my Nick Clegg once as the elimination of the National Debt!!!!

    Some commentators in the thread referred to above say that the output gap is a not capable of construction and therefore should not be used to determine policy. But whether it is calculable or not, a calculation of it by the OBR will be used to determine decisions about expenditure and tax plans up until at least 2017.

    The range of calculations are from – 0.5% (Schroders) to -4% (NIESR) for the output gap, with the OBR coming in slap in the middle of consultants at -2.6%. However Roger Bootle at Capital Economics calculates that it may be much greater. His conservative estimate is -6%.

    Why does that matter? If it is -6%, then, we are actually about to make £35 billion of cuts more than is required to eliminate the structural deficit, placing an unnecessary deflationary clamp on the economy.

    There is a real danger that ideology and not economics is driving debate about the Autumn Spending review.

  • Bassasc – what my party is trying to do is repair the almost unprecedented economic damage caused by Labour mismanagement, much of which was directly architected by Ed Balls. I would prefer it had we been in coalition at a time when there was prosperity, but unfortunately that wasnt the Labour legacy.

  • Alistair

    The last Labour government was partly to blame, as was the Tory Government in the 80s/90s, as were the bankers, as were all the proponents of deregulation, as were the Americans etc, etc

    I find your post simplistic and rather partisan – I am no fan of Balls and Labour but there is enough evidence to show that the situation is far more complex than you portray

    I would also say that the policies of this Government have exacerbated the problem, rather than resolving it.

    Perhaps if we had some evidence that ‘we are all in it together’ then we would have more understanding of the Government position

    PS My name on here is not that complex to spell…I suggest you try better next time

  • Bazzasc – who is more of a partisan – someone who reads a website edited by members of his own party, or someone who astroturfs on the websites of political opponents? I think you will find that this financial crisis happened we’d already had Labour for 10 years. 10 years of intensely relaxed Labour relationships with the City. By that standard I should give John Major credit for his successor bringing in the minimum wage, or even Maggie as she was still in power 10 years before that happened. There is almost noone who has had more influence on Labour’s financial governance over the last 10 years than the trio of Gordon Brown, Ed Balls and Ed Miliband. You, or rather the Unions, have chosen Ed Miliband, and he has reluctantly chosen Balls, with the full knowledge of that incompetence.

  • Alistair

    I have voted LD in every election, bar one, from 87. I am now an opponent because of your behaviour in Government

    The financial crisis had its roots in deregulation and uncontrolled banks. For this clearly Labour has to take a large part of the blame, but they were only building on the foundations of neoliberalism started by the Tories in the 80s and 90s. I suggest you also look back on the comments from the Tories regarding deregulation in the late 90s.

    We also have to ask the question what the response of Middle England would have been if they had a policy of reducing house prices and limiting lending (egged on by the Tories and the Daily Mail no doubt)?

    The spending argument is also something that is arguable as those of us who grew up in the Tory years saw the massive underinvestment in infrastructure during this time and I was glad to see spending returning to normal levels.

    You have also ignored the global spread of this crisis and I fail to see how Brown/Balls are to blame for sub-prime in the US apart from not challenging the status quo. For this same reason I have some sympathy with the Coalition in having to deal with the Eurocrisis but I do not accept the hypocrisy when this is used as the excuse for the depressed British economy.

  • bazzasc,
    your criticisms of the current government are fair, but they lack context and therefore represent a one-sided view.

    It is perfectly proper to attack Labour because the members of the previous government are personally responsible for the decisions they undertook when they were in office – they created the context we exist within now.

    So whether or not you agree with what’s happening under the present regime it is impossible for you or anyone else to deny that Ed Balls limited the available choices.

  • Bill,
    the link between any output gap and the size of any structural deficit is at most indirect – the former is theoretical (the difference between what the nation is producing and what we are able to produce) while the latter is real (the difference between government revenue and government expenditure).

    According to the Treasury “lagged effects of a large negative output gap generate significant downward pressure on inflation” – this and other effects of production differentials are factors in inflation which itself is only a single factor in government finance decisions.

    So I think you are severely overemphasising this point in order to justify your preexisting preference for a new stimulus package. Although I could accept a reduced stimulus in some form we should be very concerned about overexcited markets starting new bubbles, so we should be happy with the bit of confidence underpinned by recent positive news on jobs and growth.

    We can’t reconstruct the old economy, we must rebuild anew, and that requires calm, clear heads – limit your coffee intake, or replace it with some nice Earl Grey!

  • Bazzasc – a teeny bit upset perchance? 😆

  • Oranjepan

    I agree with what you say up to a point.

    Of course Labour are responsible for what happened in their time in office and should be held accountable. I suppose it is part of the political game to have sniping articles like the original one here but they are quite petty when they are just quotes with no analysis. This goes for all sides.

    As to your comments they are fine but Alistair was putting all the blame for the crisis on Labour and I pointed out that this was wrong. Also, I would like to see some more responsibility from LD for the current state of the economy as the Coalition have a significant responsibility for the poor performance since 2010 (taking too much money out of the economy, tax cuts for the rich, incompetence from the Chancellor etc, etc.) and it is LD votes that support these in the HoC.

    I come on this site as I still am interested to see the direction of the LD and consider myself to be a LD voter – at the moment I would not vote for your party though – but I do get bored by a number of posters who seem to think that anyone like me is not welcome and that only those who slavishly follow the leadership are tolerated on here (I do not include you in this)

  • tabman

    not really – just that I seem to have voted Conservative at the last election without being aware I was doing so

  • Balls lies about lying.
    No change here, move along sonny or I’ll tazer you.

  • “I have seen this before on LDV. There is a good prima facie case for a serious inconsistency here, but only because these comments are not put in the overall context of what he was saying. Now it may be that the overall context – once revealed – does not change anything. But until that is done, who knows?”

    Oh come on. As the article says, the man said “Of course there was”. Why should any context be necessary?

  • Bazzasc – how come?

    Oh, I see, you don’t like the party being in a coalition (where it only gets to implement a fraction of its manifesto where the larger party gets to implement far more of its manifesto because 1 more people voted for it than any other party and 2 our electoral system amplifies that support greatly in terms of seats and house of commons votes). It’s a shame nobody warned you that that was likely to happen beforehand. Something like “if invited, we will seek to form a government with the largest party” would have done.

  • Tabman

    So your argument is that I should never vote LD again and instead vote for the whichever of the two parties is acceptable as in a Coalition the LD will just support the biggest party without regard for whatever policy is on offer. Will that be the policy post 2015 or will it be, as I believe, a loose agreement with the Tories. Can you see a Coalition with Labour post-2015.?

    Will live to see Clegg explaining why he is voting to rescind bills and policies he voted for a year earlier.

    I voted for the LD because I believed the policies were closer to my own. I was mistaken because I did not realise the duplicity of your leadership and through my own naivety!

  • Bill le Breton 28th Oct '12 - 12:55pm


    You write, ‘the link between any output gap and the size of any structural deficit is at most indirect – the former is theoretical (the difference between what the nation is producing and what we are able to produce) while the latter is real (the difference between government revenue and government expenditure).’

    It is as I suspected, and I think you speak for many who are confused by this. The structural deficit is NOT the difference between government revenue and government expenditure. The Coalition policy is NOT to produce a balanced budget which is what you define (G-T=0) – it is to eliminate the structural deficit, which is *that part of the deficit which would exist if the economy were operating at full potential*.

    The Output Gap is defined as the difference between the actual GDP (or output) and the potential GDP. This is the figure which is driving the decisions being taken on the autumn statement. Clearly it is an estimate resulting from a calculation, but as I have been pointing out a number of top rated economic consultancies have different estimates for it at the present time. Why should we take the figure provided by the OBR when the OBR’s recent record on the multipliers has been found to be highly misleading?

    If you and others want a balanced budget then say so. But if you support the Coalition aim of eliminating the structural deficit then the calculation of the output gap is critical. And there is good reason think that the amount of cuts being considered may be £35 billion more than necessary to eliminate the structural deficit. That is, that the policy would be unnecessarily deflationary – the very last thing that we want at this stage of the economic cycle.

  • Bazzasc – I don’t know why you voted as you did. You seem to think that in a FPTP system with less than a quarter of the vote the Lib Dems were somehow going to implement their full manifesto and are disappointed that they haven’t. If a lib dem majority government was not delivering then fair enough, but (hint) it isn’t a lib dem majority government. It’s the least worst option given the system and the result last time.

    Do you have a mortgage?

  • Tabman

    i don’t see what a mortgage has to do with anything to be honest

    I think your post is a good reason why noone would vote LD again – I voted on the principal that I would elect an MP (not impossible in my constituency) that would vote according to the principles laid out in the leaflets he posted through my door. Unfortunately, he lost but then again even if he won he would just have voted for the right-wing program of the Coalition and ignored all the things he said previously. He made a big deal of the pledge as I am an advocate of free tertiary education for all.

    We had no mention before the election of what form a Coalition would take apart from some woolly comments about ‘largest’ party and no view on what form the negotiations would take. From my view it was a capitulation by a right-wing LD leadership meekly accepted by the membership. The indecent haste of these negotiations make me suspect that there was some contact well before the election. If not then it was incompetence as the problems the party have faced since then can be linked back to this agreement and the love-in between Cameron and Clegg.

    You may disagree with what I say but I am not alone in my views, as they have been expressed by others on this board. I would also ask you what you think the position of your party should be before 2015?

    Can you realistically see a LD/Labour Coalition or do you think, as I do, we will see some informal link between you and the Tories? I cannot see how you can play the role of honest brokers in 2015 when the party has clearly taken some a partisan line during the last two years and seem to act like mouthpieces for the Tories. I have seen little evidence of you acting like an independent party. The Tories may complain about your undue influence but these are the swivel-headed right-wingers that say the same think about their own leadership.

  • Tabman

    and if you do not believe a continuation of the Tory/LD coalition is likely I would refer you to a former senior LD official and winner of the award for Liberal of the Year or something like that on this website earlier in the year – suggesting he is not outside the mainstram. Funnily I have seen very little discussion of this article on here


  • Bazzasc – I’ve no idea what’s likely or not in 2015. Personally I would fear a Miliband/Balls government (and if you had a mortgage you would know why), but if the electorate deliver one, or a coalition, I would have to accept it.

  • Tabman

    Iam already fearful with the current incompetents. Not so much the ‘what’ but the ‘how’. There is an ideological attack on the state using ‘cuts’ as a pretext. This is ideological as well as economical

    I see you avoided answering the question on what you personally think would happen prior to the 2015 election. Do you see, as Littlewood does, the benefits of continuing with the Tories such as a UK FDP or would you support the same premise as 2010 where you deal with the largest party (whatever that means)?

    Trying to pretend that you can avoid answering these questions coming up to 2015 is unrealistic and I am interested to hear what you think

  • Peter Watson 28th Oct '12 - 5:34pm

    The biggest problem with the Lib Dem leadership is regularly described eloquently on this site by Matthew Huntbach: it is not that they went into coalition with the tories but the way that they have behaved in that coalition. By being the biggest public cheerleaders for everything the coalition has done with the economy, as well as benefits, education, health, energy, etc., Clegg, Alexander, Laws, Cable, and others give the impression that they have renounced the policies for which I and others voted for in 2010 and over the last couple of decades. Excuses about being the minor partner in government are meaningless when the Lib Dems in parliament give the impression that they have not even tried to fight their corner.

  • Peter Watson – you have no idea what may have taken place behind closed doors. It is entirely understandable given o recent experience and a media sniffing for the first signs of cracks that a united front would be presented.

  • I find all this he said she said stuff utterly dispiritting. Far better to come to a decision and get on with it.

  • Bazzasc – I want Tory and Labour liberals to join us. Failing that we stand on our own program and see what happens.

  • Tabman

    So you aren’t prepared to say then?

  • Bazzasc – what more do you want me to say? I’ve already told you my preferences for post election government. I’ll spell it out in order: lib, lib/con, lib/lab, con, lab.

  • Tabman

    But as you said previously your preferred option is not realistic so we will have one of the others. If it is to be a coalition then I would like to hear from your leadership before the election what they would do in an umambiguous way. In fact the media will be very interested to know the answer.

    If the answer is continued coalition with the Tories then you may as well finish being considered an independent party in a FPTP system. I can see no conceivably realistic option of you being able to form a coalition with Labour

    To be honest I am surprised you put a lib/lab coalition above Con as you seem to be a cheerleader for all their policies, even when the LD have opposed them in the past

  • as far as preferences for potential future governments go, I think we should live up to our beloved principle of equality and treat Labour and Conservatives equally.

    Quite simple we cannot and shouldnot prejudge the outcome of the next election to do so – it creates a hostage to fortune to state a preference for a coalition partner.

    I’d prefer it if we tried to look at the facts before we make a decision, and accept this is what actually informs what we decide.

    The last election saw a situation where anything other than the current arrangement was impossible, impractical and politically dangerous – for a variety of reasons. Clegg made the correct choice because it was the only choice. You might disagree that it was ‘necessary’, and I’ll also admit I found it painful because I was unprepared for it.

    At the next election (or at least in the run-up to it) I will be looking at the statements made by figures on either side to see which offers the greatest prospect of a productive relationship, but as this post reminds us, and comparing the performances of Emily Thornberry and Claire Perry as their respective party representatives on Dimbleby’s last #BBCQT, the choice is currently clear (if somewhat depressing).

    For all their undoubted (ahem) qualities, I don’t see Miliband as a future PM, and I really don’t want to see Balls as a future CoE. I watched their conference to look for alternatives and found few, who else have they got?

  • Bill,
    yes, that was an error on my part, however the comment was referring back to Ed Balls’ statements regarding the policies he was responsible for under the previous government, in which he stated Labour ran a structural deficit in 2007 – a fact he was loathe to admit for the reasons implied in your comment, that a structural deficit exists even when the economy is running at maximum potential (ie when there is ‘no’ output gap – this still seems like a completely subjective measure, as who can accurately calculate potential?).

    I’m open about the policy tools to be used in any particular circumstance, which is why I’m not ideologically predisposed to favour a new stimulus of whatever size you may want us to be able to get away with. I’m not looking to balance the budget in any particular taxyear, rather that I do agree we should reemphasise the principle of balancing budgets over the term of the economic cycle (however you define this).

    My main criticism is that I think it’s a big risk not to state as qualification alongside any policy proposal that you’re looking to reduce the level of state intervention over time, conditional on long-term outlooks.

    Market confidence depends in high amount on demonstrating intent, so hiding real intentions actually undermines stability and forces perverse policy choices to deal with unwanted reactions, as Balls now well knows as the consequence of his consistently mixed messages.

  • Bazzasc – I expect the leadership to do as they did last time. Work with what the electorate and the electoral system deliver. I am a “cheerleader” for liberal policies, whoever might deliver them. What are you?

  • Surely the surprise isn’t that he made inconsistent comments, rather that anyone listens long enough to notice the inconsistencies….

  • The deficit was not seen as a problem because of the assumption was the boom would continue forever (politicians and bureaucrats aren’t particularly forward looking or read ever economic history . The assumption is that everything will continue as is and there will be no sudden shocks or surprises even though world economic history is little more than a series of booms and busts..
    The banks got the financial deregulation they wanted and nobody in government was especially bothered about debt. The concern was that any attempt to control debt by raising interest rates would reduce growth and economic growth was king.
    Economist believe in their economic models until they cease to fit reality when they are suddenly lost.

  • Andrew Tennant 1st Nov '12 - 5:07pm

    I’ll agree with bazzasc that ‘We’ll seek to form a government with the largest party’ isn’t the clever answer some think it is. At the time, amidst Cleggmania, I thought it incentivised potential tactical voters to back their preferred of the larger parties to try and swing the balance in their favour rather than providing a prompt to them to vote for us.

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