Ed Balls follows Staggers with IMF takedown

Shadow chancellor in waiting takes a leaf from the New Statesman.

It's good to be in good company.

In his trenchant bid for the shadow chancellorship earlier today, Ed Balls tore into the IMF and their Osborne-led sado-monetarist fanbase:

But we don't need to go back to the history books to see the warning signs over George Osborne's economic policy - we only need to look across the Irish Sea.

Two years ago, the Irish Government convinced itself they had to slash public services and cut child benefits to get their deficit down as fast as possible and reassure the money markets. The IMF praised the Irish government for its "sense of urgency".

And what has happened since? Recession turned to slump, unemployment at a 16-year high, 19 consecutive months of deflation, consumer spending and tax revenues plummeting, and the deficit worse now than when they started.

The Irish Economist David McWilliams said this week: "It is like watching a slow car crash. The more they cut, the more the economy will continue to stagnate."

George Osborne used to say that Ireland has so much to teach us, if only we were willing to learn.

In a Staggers post yesterday, I gave Ireland as one example of why a blessing from the IMF is at best, a mixed one. It's a compliment, if only by association, from the right man for the job.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.