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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This is no time for a coup against a successful Labour leader

Don't blame Jeremy Corbyn for the Labour Party's crisis.

"The people who are sovereign in our party are the members," said John McDonnell this morning. As the coup against Jeremy Corbyn gains pace, the Shadow Chancellor has been talking a lot of sense. "It is time for people to come together to work in the interest of the country," he told Peston on Sunday, while emphasising that people will quickly lose trust in politics altogether if this internal squabbling continues. 

The Tory party is in complete disarray. Just days ago, the first Tory leader in 23 years to win a majority for his party was forced to resign from Government after just over a year in charge. We have some form of caretaker Government. Those who led the Brexit campaign now have no idea what to do. 

It is disappointing that a handful of Labour parliamentarians have decided to join in with the disintegration of British politics.

The Labour Party had the opportunity to keep its head while all about it lost theirs. It could have positioned itself as a credible alternative to a broken Government and a Tory party in chaos. Instead we have been left with a pathetic attempt to overturn the democratic will of the membership. 

But this has been coming for some time. In my opinion it has very little to do with the ramifications of the referendum result. Jeremy Corbyn was asked to do two things throughout the campaign: first, get Labour voters to side with Remain, and second, get young people to do the same.

Nearly seven in ten Labour supporters backed Remain. Young voters supported Remain by a 4:1 margin. This is about much more than an allegedly half-hearted referendum performance.

The Parliamentary Labour Party has failed to come to terms with Jeremy Corbyn’s emphatic victory. In September of last year he was elected with 59.5 per cent of the vote, some 170,000 ahead of his closest rival. It is a fact worth repeating. If another Labour leadership election were to be called I would expect Jeremy Corbyn to win by a similar margin.

In the recent local elections Jeremy managed to increase Labour’s share of the national vote on the 2015 general election. They said he would lose every by-election. He has won them emphatically. Time and time again Jeremy has exceeded expectation while also having to deal with an embittered wing within his own party.

This is no time for a leadership coup. I am dumbfounded by the attempt to remove Jeremy. The only thing that will come out of this attempted coup is another leadership election that Jeremy will win. Those opposed to him will then find themselves back at square one. Such moves only hurt Labour’s electoral chances. Labour could be offering an ambitious plan to the country concerning our current relationship with Europe, if opponents of Jeremy Corbyn hadn't decided to drop a nuke on the party.

This is a crisis Jeremy should take no responsibility for. The "bitterites" will try and they will fail. Corbyn may face a crisis of confidence. But it's the handful of rebel Labour MPs that have forced the party into a crisis of existence.

Liam Young is a commentator for the IndependentNew Statesman, Mirror and others.