Miliband moves to close down Balls speculation

The Labour leader has enough tricky policy questions coming his way. He doesn't want to be quizzed about personnel too.

Ed Miliband, on the Andrew Marr programme today, when asked about speculation that his brother David might be brought back to Labour’s front line to serve as shadow chancellor, said “there is no vacancy” – which, of course, there isn’t. That is a stock formula for equivocation disguised as certainty. It sounds like a definitive backing of the incumbent without closing down any longer term options. There is no vacancy now. That doesn’t mean there won’t ever be one. But Miliband also said that Ed Balls would "absolutely" be Shadow Chancellor going into the election campaign – a level of support that has hitherto been lacking.

The will-he-won’t-he sack Balls debate is a Westminster parlour game that falls in and out of fashion every few months. There has been a particularly intense bout of speculation recently (about which I blogged more extensively here). Miliband’s dilemma is that he wants to keep options open in case it becomes apparent that Labour’s lack of an effective economic message – or, rather, lack of a popular message-giver – is in danger of costing the election, but if he allows speculation to rumble on it overshadows the rest of his political project. Soap opera and pop psychology easily squeeze policy development and nuanced positioning out of the news. That is especially true when policy development is slow and positioning is cautious.

Miliband will have been particularly keen to kill off the Balls-related speculation as he is about to undertake a risky political manoeuvre that is not universally supported in the shadow cabinet and the party. He confirmed today that he has no intention of matching David Cameron’s pledge to hold a referendum on Britain’s European Union membership – a gambit the Prime Minister is universally expected to make in a speech on 22nd January. As I reported in my column last week, Miliband intends to take what he and his allies see as the statesmanlike moral high ground, attacking Cameron for gambling with Britain’s vital alliances and destabilising the economy in the process purely to salvage his position in a frustrated and rebellious Tory party.

But there are those in the Labour party who worry that Miliband will not be able to sustain that position through an election campaign. He will constantly be asked why the Tories feel confident asking the people for their view on Europe while Labour appears to be running scared. Even those in the shadow cabinet who support Miliband’s current position recognise that the going will be tough. (Much depends on whether the Liberal Democrats acquiesce to the referendum pledge or back the Miliband line – Nick Clegg has the power to leave one of the Labour or Tory leaders looking painfully isolated on an issue of  national significance, a rare bit of leverage the Lib Dem leader will no doubt be keen to prolong and exploit.)

Either way, Miliband does not want to spend the next few weeks, when he will have to answer plenty of difficult questions about his holding-pattern policies on everything from welfare to the economy to Europe, also answering questions about whether his shadow chancellor is a temporary feature or a permanent fixture.

Ed Miliband and Ed Balls. Source: Getty

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Getty
Show Hide image

Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump