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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Emily Thornberry heckled by Labour MPs as tensions over Trident erupt

Shadow defence secretary's performance at PLP meeting described as "risible" and "cringeworthy". 

"There's no point trying to shout me down" shadow defence secretary Emily Thornberry declared midway through tonight's Parliamentary Labour Party meeting. Even by recent standards, the 70-minute gathering was remarkably fractious (with PLP chair John Cryer at one point threatening to halt it). Addressing MPs and peers for the first time since replacing Maria Eagle, Thornberry's performance did nothing to reassure Trident supporters. 

The Islington South MP, who voted against renewal in 2007, said that the defence review would be "wide-ranging" and did not take a position on the nuclear question (though she emphasised it was right to "question" renewal). She vowed to listen to colleagues as well as taking "expert advice" and promised to soon visit the Barrow construction site. But MPs' anger was remorseless. Former shadow defence minister Kevan Jones was one of the first to emerge from Committee Room 14. "Waffly and incoherent, cringeworthy" was his verdict. Another Labour MP told me: "Risible. Appalling. She compared Trident to patrolling the skies with spitfires ... It was embarrassing." A party source said afterwards that Thornberry's "spitfire" remark was merely an observation on changing technology. 

"She was talking originally in that whole section about drones. She'd been talking to some people about drones and it was apparent that it was absolutely possible, with improving technology, that large submarines could easily be tracked, detected and attacked by drones. She said it is a question of keeping your eye on new technology ... We don't have the spitfires of the 21st century but we do have some quite old planes, Tornadoes, but they've been updated with modern technology and modern weaponry." 

Former first sea lord and security minister Alan West complained, however, that she had failed to understand how nuclear submarines worked. "Physics, basic physics!" he cried as he left. Asked how the meeting went, Neil Kinnock, who as leader reversed Labour's unilateralist position in 1989, simply let out a belly laugh. Thornberry herself stoically insisted that it went "alright". But a shadow minister told me: "Emily just evidently hadn't put in the work required to be able to credibly address the PLP - totally humiliated. Not by the noise of the hecklers but by the silence of any defenders, no one speaking up for her." 

Labour has long awaited the Europe split currently unfolding among the Tories. But its divide on Trident is far worse. The majority of its MPs are opposed to unilateral disarmament and just seven of the shadow cabinet's 31 members share Jeremy Corbyn's position. While Labour MPs will be given a free vote when the Commons votes on Trident renewal later this year (a fait accompli), the real battle is to determine the party's manifesto stance. 

Thornberry will tomorrow address the shadow cabinet and, for the first time this year, Corbyn will attend the next PLP meeting on 22 February. Both will have to contend with a divide which appears unbridgeable. 

George Eaton is political editor of the New Statesman.