By Jonathan Isaby
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Shadow Chancellor Ed Balls is currently delivering his speech on the economy at the LSE, as trailed in this morning's media.
The New Statesman has posted a full text of his speech, but here's the key passage in which Balls declared that the Government should now be cutting tax:
"My suggestion to George Osborne is that, while he will not agree to reverse his mistaken VAT rise permanently, he should now reverse it temporarily until the economy is growing strongly again. By putting more money directly into people's pockets, it would be a boost for consumers who are feeling the squeeze from rising prices and rising taxes – especially pensioners and those on low and fixed incomes; the inevitable increase in consumer confidence would help the struggling retail sector; it would help to push down inflation – and so reduce the risk of a recovery-choking interest rate rise later this year; and it would give the flat lining economy the jump-start it so urgently needs, boost jobs and help us get the deficit down for the long-term."
Balls is also questioning the judgment of the IMF acting Managing Director, John Lipsky – who last week endorsed the Coalition Government's macroeconmic plans for deficit reduction – by referring to comments he made twenty years ago about the stability of the ERM.
Conservative Party deputy chairman Michael Fallon has already responded with the following statement:
“It is extraordinary that Ed Balls has chosen to personally attack the head of the IMF. Not only is he defying his own leader in refusing to accept responsibility for the mess that Labour created, he is now attacking anyone that disagrees with him. Only last night the Governor of the Bank of England made clear that it made no sense to change our economic policy. Ed Balls' Plan B of increased spending and unfunded tax cuts at a time when we have a similar deficit to Greece and Portugal looks like a plan for bankruptcy.”