The speech at the LSE is Mr Balls’ first since he became Shadow Chancellor Balls calls for emergency tax cut
The speech at the LSE is Mr Balls’ first since he became Shadow Chancellor Shadow chancellor Ed Balls is to use a major policy speech to call for a temporary emergency tax cut to stimulate the economy.
He will say acting now to counter the slowdown is a better option than “ploughing on and hoping for the best”.
Mr Balls says the economy needs a jump start and a tax cut would boost consumer confidence.
The Conservatives said Mr Balls had not come up with a credible alternative for tackling the deficit.
In his first major policy speech since becoming shadow chancellor, Mr Balls will also insist Labour are not to blame for the deficit.
“Mr Balls will point out that the same coalition of a Conservative chancellor backed by the man who is now the IMF’s acting director insisted in the 1990s that there was no alternative to staying in the ERM and were proved disastrously wrong”
Mr Balls says the government’s cuts programme risks a “vicious circle” of lower investment, income and employment leading to slower growth, bigger tax increases and more spending cuts.
He says Chancellor George Osborne’s refusal to draw up a “Plan B” is because of a “political gamble” rather than for Britain’s economic interests.
“When I hear George Osborne refuse even to countenance a Plan B, I do not believe this is economic judgment at work, but a political gamble with the nation’s economy from a chancellor shaping his policies not around constitutional responsibility, sound economics and the protection of jobs, growth and homes, but around a fixed political strategy to win an election in 2015,” Mr Balls will say.
In the speech at the London School of Economics he is expected to add: “I’m not someone who shirks tough decisions.
Lost ground
“And I am making the case for a slower and more balanced approach not because I am a deficit denier, but because this is the tough – but cautious and credible – thing to do.”
“Ed Balls is yet to set out the cuts he would have to make to offer a credible alternative to clearing up Labour’s mess”
Michael Fallon Deputy Tory chairman
Mr Balls relies on forecasts from the Office for Budget Responsibility which suggests the UK will be £5.6bn worse off at the end of 2012 than was predicted at the time of last year’s Budget.
He argues this figure will grow to £58bn by 2015 if nothing is done.
“The test for the Treasury isn’t just whether they can post better growth rates – we all know the economy will return to stronger growth eventually – it’s whether they can make up all this lost ground in jobs and living standards,” Mr Balls will say.
Conservative party deputy chairman Michael Fallon said: “Ed Balls is yet to set out the cuts he would have to make to offer a credible alternative to clearing up Labour’s mess.
“Our deficit reduction plan is backed by international organisations including the IMF, the CBI, the OECD and the Obama administration. Ed Balls’ plan isn’t even backed by Ed Miliband.”
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