Balls's new strategy is a political masterstroke

His commitment to long-term fiscal discipline strengthens the case for short-term stimulus.

Ed Balls's speech isn't until this afternoon (we'll be live blogging his speech from 12pm) but it's been leading the news all morning. And with good reason. The shadow chancellor is preparing to unveil a new strategy which will see him maintain the case for short-term stimulus but commit to long-term fiscal discipline. Balls will promise to meet the two pledges set out by George Osborne - to eliminate the structural deficit and to ensure a falling debt-to-GDP ratio - and will announce that these will be monitored by the Office for Budget Responsibility (this morning, for the first time, he said that setting up the OBR was "the right thing to do".) In addition, he will promise that any windfall from the sale of state-owned bank shares (estimated by the OBR at £3.4bn) will be used exclusively to pay down the deficit and not to cut taxes.

Balls's smart calculation is that these promises will provide him with the political cover necessary to make the case for renewed stimulus in the form of a temporary cut in VAT and other measures (he has promised to set out a five-point plan for restoring growth in his speech). As Keynes put it: "The boom, not the slump, is the right time for austerity at the Treasury." This is an economic truth that entirely eludes George Osborne. The eurozone crisis has demonstrated precisely why austerity is self-defeating. As Balls argued this morning, there is no reason to believe that the markets would panic if Britain slowed the pace of its deficit reduction programme, not least while the UK can borrow at near historic lows. "The markets know that if economies aren't growing, then you get into a vicious circle and your debt dynamics can actually make a debt unsustainable," he said.

Osborne will reply that Balls's answer to a debt crisis is always more debt. But his own strategy has reduced growth, increased unemployment and, consequently, slowed the pace of deficit reduction (Osborne has already been forced to announce an extra £46bn of borrowing). As the self-defeating nature of Osborne's approach becomes clearer, voters will look for an alternative. Balls is providing it.

George Eaton is political editor of the New Statesman.

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Theresa May's "clean Brexit" is hard Brexit with better PR

The Prime Minister's objectives point to the hardest of exits from the European Union. 

Theresa May will outline her approach to Britain’s Brexit deal in a much-hyped speech later today, with a 12-point plan for Brexit.

The headlines: her vow that Britain will not be “half in, half out” and border control will come before our membership of the single market.

And the PM will unveil a new flavour of Brexit: not hard, not soft, but “clean” aka hard but with better PR.

“Britain's clean break from EU” is the i’s splash, “My 12-point plan for Brexit” is the Telegraph’s, “We Will Get Clean Break From EU” cheers the Express, “Theresa’s New Free Britain” roars the Mail, “May: We’ll Go It Alone With CLEAN Brexit” is the Metro’s take. The Guardian goes for the somewhat more subdued “May rules out UK staying in single market” as their splash while the Sun opts for “Great Brexpectations”.

You might, at this point, be grappling with a sense of déjà vu. May’s new approach to the Brexit talks is pretty much what you’d expect from what she’s said since getting the keys to Downing Street, as I wrote back in October. Neither of her stated red lines, on border control or freeing British law from the European Court of Justice, can be met without taking Britain out of the single market aka a hard Brexit in old money.

What is new is the language on the customs union, the only area where May has actually been sparing on detail. The speech will make it clear that after Brexit, Britain will want to strike its own trade deals, which means that either an unlikely exemption will be carved out, or, more likely, that the United Kingdom will be out of the European Union, the single market and the customs union.

(As an aside, another good steer about the customs union can be found in today’s row between Boris Johnson and the other foreign ministers of the EU27. He is under fire for vetoing an EU statement in support of a two-state solution, reputedly to curry favour with Donald Trump. It would be strange if Downing Street was shredding decades of British policy on the Middle East to appease the President-Elect if we weren’t going to leave the customs union in order at the end of it.)

But what really matters isn’t what May says today but what happens around Europe over the next few months. Donald Trump’s attacks on the EU and Nato yesterday will increase the incentive on the part of the EU27 to put securing the political project front-and-centre in the Brexit talks, making a good deal for Britain significantly less likely.

Add that to the unforced errors on the part of the British government, like Amber Rudd’s wheeze to compile lists of foreign workers, and the diplomatic situation is not what you would wish to secure the best Brexit deal, to put it mildly.

Clean Brexit? Nah. It’s going to get messy. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.