Balls is right to target Mervyn King

The Bank of England governor crossed a line when he called for a “plan A”.

Just a few weeks ago, Ed Balls questioned whether Mervyn King's support for the government's austerity measures was as sincere as it appeared. He told Andrew Marr: "I don't think that Mervyn King in his heart of hearts really believes that crushing the economy in this way is the right way to get the economy moving."

But in an interview in today's FT, Labour's Keynesian pitbull launches a long-overdue assault on the governor of the Bank of England. He tells the paper: "The last thing you ever want is for the Bank of England to be drawn into the political arena . . . central bank governors have to be very careful about tying themselves too closely to fiscal strategies, especially when they are extreme and are making their job on monetary policy more complicated."

Balls is right. King's declaration this week that "there has to be a plan A" (a line first used by George Osborne himself) was his most overtly political statement yet. It amounted to an explicit rejection of Labour's calls for a "plan B".

As Sunder Katwala notes, it was little surprise that David Cameron chose to quote King at length during this week's PMQs. In one of his answers to Ed Miliband, Cameron said:

Above all, what I would say to him is what the governor of the Bank of England said this morning: "There has to be a plan A . . . This country needs fiscal consolidation to deal with the biggest Budget deficit in peacetime."

There are two possible explanations for King's behaviour. Either he is a highly naive man who does not anticipate that his words will be used for political purposes, or he is a highly partisan man who believes, against all evidence to the contrary, that the coalition's premature fiscal retrenchment will increase growth. The second seems the likelier explanation, but neither is palatable and both raise the question: is this man fit to lead an independent Bank of England?

George Eaton is political editor of the New Statesman.

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The trouble with a second Brexit referendum

A new vote risks coming too soon for Remainers. But there is an alternative. 

In any given week, a senior political figure will call for a second Brexit referendum (the most recent being David Miliband). It's not hard to see why. EU withdrawal risks proving an act of political and economic self-harm and Leave's victory was narrow (52-48). Had Remain won by a similar margin, the Brexiteers would have immediately demanded a re-run. 

But the obstacles to another vote are significant. Though only 52 per cent backed Brexit, a far larger number (c. 65 per cent) believe the result should be respected. No major party currently supports a second referendum and time is short.

Even if Remainers succeed in securing a vote, it risks being lost. As Theresa May learned to her cost, electorates have a habit of punishing those who force them to polls. "It would simply be too risky," a senior Labour MP told me, citing one definition of insanity: doing the same thing and expecting a different result. Were a second referendum lost, any hope of blocking Brexit, or even softening it, would be ended. 

The vote, as some Remainers note, would also come at the wrong moment. By 2018/19, the UK will, at best, have finalised its divorce terms. A new trade agreement with the EU will take far longer to conclude. Thus, the Brexiteers would be free to paint a false picture of the UK's future relationship. "It would be another half-baked, ill-informed campaign," a Labour MP told me. 

For this reason, as I write in my column this week, an increasing number of Remainers are attracted to an alternative strategy. After a lengthy transition, they argue, voters should be offered a choice between a new EU trade deal and re-entry under Article 49 of the Lisbon Treaty. By the mid-2020s, Remainers calculate, the risks of Brexit will be clearer and the original referendum will be a distant memory. The proviso, they add, is that the EU would have to allow the UK re-entry on its existing membership terms (rather than ending its opt-outs from the euro and the border-free Schengen Area). 

Rather than publicly proposing this plan, MPs are wisely keeping their counsel. As they know, those who hope to overturn the Brexit result must first be seen to respect it. 

George Eaton is political editor of the New Statesman.