Why Labour should be wary of attacking Osborne over borrowing

By repeatedly criticising the Chancellor for missing his deficit targets, the party risks reinforcing the impression that borrowing is always an economic ill.

George Osborne is fond of boasting that the deficit has fallen "each and every year" under the coalition, so it was unfortunate for the Chancellor when revisions made by the ONS last week meant that borrowing was officially higher in 2012-13 (£118.8bn) than in 2011-12 (£118.5bn).

At today's Treasury questions, Ed Balls and the rest of Labour's hit squad repeatedly attempted to force the Chancellor to concede as much, but Osborne gave no ground. He (correctly) pointed out that borrowing was only higher last year (2012-13) because the ONS had revised the 2011-12 figure down (by £2.4bn), "which was actually good news", and that, in GDP terms, the deficit fell from 7.8 per cent to 7.7 per cent. Along the way, the vampiric Osborne suggested that taking lessons from Balls on how to balance the books was like "getting a lesson from Dracula on how to look after a blood bank". 

Still, the facts are the facts: on the measure traditionally favoured by the Chancellor, borrowing rose last year. In a final attempt to force the truth out of him, Balls raised a point of order with the Speaker, warning that Osborne may have "inadvertently misled the House", but Bercow brushed it aside.

In so doing, he may have done the shadow chancellor a favour. Balls might be right when he points out that Osborne has borrowed billions more than expected but this line of attack is less convincing when Labour's Keynesian strategy is explicitly based on borrowing even more. The difference, of course, is that while Labour would borrow for growth (in the form of higher infrastructure spending), the coalition is borrowing to meet the cost of failure (in the form of lower growth and higher long-term unemployment). But while this might be a coherent economic position, politically, it's a tough sell. 

Rather than becoming trapped in a technical debate about the deficit, Labour would be wiser to focus on living standards and growth, but if it wants to continue to attack Osborne on this territory it will need a much better explanation of its own approach. Without clearly setting out how and why it would borrow for growth, the party merely reinforces the impression that borrowing is always and everywhere an economic ill. And that only strengthens Osborne's hand. 

George Osborne and Ed Balls attend the State Opening of Parliament, in the House of Lords at the Palace of Westminster on May 8, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Italian PM Matteo Renzi resigns after referendum No vote

Europe's right-wing populists cheered the result. 

Italy's centrist Prime Minister Matteo Renzi was forced to resign late on Sunday after he lost a referendum on constitutional change.

With most ballots counted, 60 per cent of Italians voted No to change, according to the BBC. The turn out was nearly 70 per cent. 

Voters were asked whether they backed a reform to Italy's complex political system, but right-wing populists have interpreted the referendum as a wider poll on the direction of the country.

Before the result, former Ukip leader Nigel Farage tweeted: "Hope the exit polls in Italy are right. This vote looks to me to be more about the Euro than constitutional change."

The leader of France's far-right Front National, Marine Le Pen, tweeted "bravo" to her Eurosceptic "friend" Matteo Salvini, a politician who campaigned for the No vote. She described the referendum result as a "thirst for liberty". 

In his resignation speech, Renzi told reporters he took responsibility for the outcome and added "good luck to us all". 

Since gaining office in 2014, Renzi has been a reformist politician. He introduced same-sex civil unions, made employment laws more flexible and abolished small taxes, and was known by some as "Europe's last Blairite".

However, his proposed constitutional reforms divided opinion even among liberals, because of the way they removed certain checks and balances and handed increased power to the government.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.