Ed Balls rails against cuts to manufacturing

“Curtailing ambition”.

Ed Balls used his address to yesterday’s EEF Manufacturing Conference, perhaps unsurprisingly, as a platform to rail against spending cuts in advance of the delivery of the budget in two weeks’ time.

Playing straight to his manufacturer audience’s fear of Britain sliding into industrial obscurity, he warned that the government’s obsession with deficit reduction at the expense of long-term investment would “curtail ambition” in business and “militate against” the UK’s ability to compete with Europe (read, Germany).

His appearance at the conference coincided with the publication today of a labour-commissioned report by Sir George Cox, Overcoming short-termism within British business, which argues for executive pay to reflect success over longer cycles, tax changes to favour equity markets, and a mechanism to make infrastructure investment decisions independent of political cycles.

Despite a fantastically awkward bit of audience Q&A, in which Balls avoided verbally signing his party up to Sir George’s proposals even though the report author was sitting just feet away in the front row, the rhetoric seemed to go over well with delegates.

But in terms of a demonstration of long term-thinking, the Sturm & Drang over the budget’s treatment of British business paled in comparison to the day’s opening presentation, delivered by Jim “BRICs” O’Neill, Goldman Sachs’ chairman of asset management.

As one might expect from the man who coined the now ubiquitous acronym for emerging markets, O’Neill had very little to say directly about the state of British industry, and even the UK’s fortunes in the context of the Eurozone crisis.

Instead he spoke frankly, and backed by some very big statistics, about the overwhelming importance of emerging markets, particularly China, to both the UK and world economies over the decades to come.

Professing himself to be an optimist, O’Neill predicted the world economy would grow close to 4 per cent in the current decade, largely thanks to China which, he reminded us in words notoriously borrowed by David Cameron, grows the equivalent of Greek GDP every twelve and a half weeks. To underscore the point, O’Neill mentioned in passing that China had, since the end of 2010, grown by approximately the current size of the Indian economy.

He said that if the US and China could partially reverse their traditional roles with regard to production and consumption, so that China ended up “spending more and producing less” and the US vice versa, “it would be a very good sign – and this appears to be happening.”

In response to audience anxiety over the Eurozone, he acknowledged that while Europe was still the single most important export region for the UK, the percentage of UK exports going to the Eurozone had fallen from 55 per cent to 45 per cent over the last decade, and would likely fall further to 39 per cent by 2020.

By the same point time, he argued, 17 per cent of UK exports will likely be destined for the BRICs, while Germany will probably be exporting twice as much to China as to France. If we had known that in the early 1990s, he posited, there might never have been a Eurozone in the first place.

When drawn by session chair Krishnan Guru-Murthy on what he would do if he were chancellor in two weeks, his answer said more through understatement than Balls did through twenty minutes on the soapbox:

“Those nations with more emphasis on long-term fiscal consolidation rather than a "cut debt now" mentality tend to be recovering better… It’s entirely understandable to want to lower debt and to shrink [the financial services] sector… but trying to do both at once? It could be very difficult, and I think I’ll leave it at that”.

Ed Balls. Photograph: Getty Images

By day, Fred Crawley is editor of Credit Today and Insolvency Today. By night, he reviews graphic novels for the New Statesman.

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage