Osborne has stolen Margaret Thatcher's 1980s manual

My conversation with Ed Balls.

I spent much of yesterday marshalling my own thoughts on the consequences of the latest GDP figures (here is the link to my column) -- not good, since you are asking. In the course of the day, I managed to speak with shadow chancellor, Ed Balls, about his views on the data and, more generally, on the coalition's economic strategy.

Ed was on robust form as ever and I thought I'd share some of his insights below. I can't do better than to quote him verbatim.

The outgoing head of the CBI, Richard Lambert, captured it well when he said: "Politics appears to have trumped economics on too many occasions over the past eight months." There is no doubt that George Osborne is a highly skilled political strategist. But he is making the classic mistake of the past 100 years in believing that you can impose a political strategy on the British economy. Cutting too far and too fast may make political sense for the Tories but it simply isn't working economically.

He then went on to suggest that this has all been drawn directly from Margaret Thatcher's playbook.

The political strategy he is implementing is straight out of Margaret Thatcher's 1980s manual: impose as much pain as you can straight after the election, raise taxes, cut spending, slash benefits, make people feel lucky to have a job, build up your war chest and then cut taxes just before the election, hope to win a majority and start all over again.

He is following Mrs. Thatcher's strategy to the letter -- right down to the immediate hike in VAT, even if it breaks a pre-election promise. But this strategy is irresponsible and dangerous. Two decades ago, our country paid a very high price because of the economic mistakes of the 1980s recession and the years of slow growth and rising unemployment that followed. Manufacturing capacity was lost permanently. A whole generation of young people saw their lives blighted by long-term unemployment.

Our society was divided, child poverty soared and our infrastructure decayed. Today, we see policies that are hitting women harder than men -- and hitting families with children hardest of all. A standard-of-living squeeze, which will choke off growth. And we have seen growth flatline in the past six months, compared to growth of 1.8 per cent in the previous six months, before George Osborne tore up Labour's plan to get the deficit down in a steadier way.

You can't get the deficit down without strong growth, with people in work and paying taxes. So when I hear Osborne refuse even to countenance the idea of putting jobs and growth first, I can see no economic judgement at work at all -- just a political gamble with the nation's economy.

The shadow chancellor's comments stand in sharp contrast to the Treasury's bizarre claim, repeated by Osborne and Cameron, that the data release was "good news", as the economy had "returned to growth", when it clearly has not. It's a strange old world when the only "positive" news that could be found was that sterling strengthened against the dollar and the euro, because some in the markets had priced in an even worse outcome. There are likely to be even worse days ahead.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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How the shadow cabinet forced Jeremy Corbyn not to change Labour policy on Syria air strikes

Frontbenchers made it clear that they "would not leave the room" until the leader backed down. 

Jeremy Corbyn had been forced to back down once before the start of today's shadow cabinet meeting on Syria, offering Labour MPs a free vote on air strikes against Isis. By the end of the two-hour gathering, he had backed down twice.

At the start of the meeting, Corbyn's office briefed the Guardian that while a free would be held, party policy would be changed to oppose military action - an attempt to claim partial victory. But shadow cabinet members, led by Andy Burnham, argued that this was "unacceptable" and an attempt to divide MPs from members. Burnham, who is not persuaded by the case for air strikes, warned that colleagues who voted against the party's proposed position would become targets for abuse, undermining the principle of a free vote.

Jon Ashworth, the shadow minister without portfolio and NEC member, said that Labour's policy remained the motion passed by this year's conference, which was open to competing interpretations (though most believe the tests it set for military action have been met). Party policy could not be changed without going through a similarly formal process, he argued. In advance of the meeting, Labour released a poll of members (based on an "initial sample" of 1,900) showing that 75 per cent opposed intervention. 

When Corbyn's team suggested that the issue be resolved after the meeting, those present made it clear that they "would not leave the room" until the Labour leader had backed down. By the end, only Corbyn allies Diane Abbott and Jon Trickett argued that party policy should be changed to oppose military action. John McDonnell, who has long argued for a free vote, took a more "conciliatory" approach, I'm told. It was when Hilary Benn said that he would be prepared to speak from the backbenches in the Syria debate, in order to avoid opposing party policy, that Corbyn realised he would have to give way. The Labour leader and the shadow foreign secretary will now advocate opposing positions from the frontbench when MPs meet, with Corbyn opening and Benn closing. 

The meeting had begun with members, including some who reject military action, complaining about the "discorteous" and "deplorable" manner in which the issue had been handled. As I reported last week, there was outrage when Corbyn wrote to MPs opposing air strikes without first informing the shadow cabinet (I'm told that my account of that meeting was also raised). There was anger today when, at 2:07pm, seven minutes after the meeting began, some members received an update on their phones from the Guardian revealing that a free vote would be held but that party policy would be changed to oppose military action. This "farcical moment", in the words of one present (Corbyn is said to have been unaware of the briefing), only hardened shadow cabinet members' resolve to force their leader to back down - and he did. 

In a statement released following the meeting, a Corbyn spokesperson confirmed that a free vote would be held but made no reference to party policy: 

"Today's Shadow Cabinet agreed to back Jeremy Corbyn's recommendation of a free vote on the Government's proposal to authorise UK bombing in Syria.   

"The Shadow Cabinet decided to support the call for David Cameron to step back from the rush to war and hold a full two day debate in the House of Commons on such a crucial national decision.  

"Shadow Cabinet members agreed to call David Cameron to account on the unanswered questions raised by his case for bombing: including how it would accelerate a negotiated settlement of the Syrian civil war; what ground troops would take territory evacuated by ISIS; military co-ordination and strategy; the refugee crisis and the imperative to cut-off of supplies to ISIS."

George Eaton is political editor of the New Statesman.