Home > Analysis, Economy, Housing, Labour > Why Ed Balls is right on the Economy

Why Ed Balls is right on the Economy

The Oldfield-Pike Project has not declared for any of the Labour Leadership Candidates on account of being non-aligned politically. If it was Labour aligned it would back David Miliband but that is another story. However, after much deliberation the Oldfield-Pike Project would like to make small comments on the Leadership contest between now and the 24th September. The first in the series is on Ed Balls.

 Over the past few weeks Ed Balls has shown himself to be knowledgeable on the economy, unsurprising considering a career at the FT and the Treasury before becoming an MP. His keynote speech at Bloomberg offered an interesting insight into how Ed Balls’ mind works. His analysis is spot on, if copied from various sources (the Project believes ‘plagiarised’ to be too strong a word). There is an increased risk of a double-dip recession, which could not have been said a month ago.

 His comments about using £6bn from reduced borrowing to fund the construction of houses first raised our eyebrows followed quickly by a very small nod in agreement. The Oldfield-Pike Project has always implicitly argued for fiscal frugality, however Mr Balls is correct in his assessment that if this problem is not addressed soon it will merely create worse problems in the future. Britain has reached, or soon will reach, crisis point with a shortage of housing, more specifically housing that is applicable to social and private tenants. The Project believes that a relatively small investment now will pay dividends in the future as it will reduce the strain on an already saturated housing market.

 Mr Balls’ analysis on reducing the structural deficit through growth is a possible course of action, but it is not a course of action that the Project would endorse or even recommend. It will, theoretically, create a more stable economy in the long run and growth begets stability (NOTE: it is not in the market’s interests to see Britain’s credit rating downgraded). But it will take a period of years to come to fruition, up to 20 years to eliminate by conservative estimates, and in the meanwhile another crisis could have struck with Britain in an ill prepared financial state to absorb the shocks.

 Because of the above reason, the Oldfield-Pike Project does not believe that Mr Balls would make an effective leader of any party. We might recommend him for the Shadow Chancellorship if he takes a more acceptable stance on the economy. However we would like to wish Mr Balls the best of luck in any endeavour.

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