While our power-crazed PM stumbles from one problem (Andy Coulson) to another (giving doctors enormous budgetary control) his best (political) friend George is facing a more obvious challenge.
The appointment of Ed Balls, as Shadow Chancellor of the Exchequer, will mean he faces a political opponent who is probably more intellectually gifted, and certainly better equipped to articulate the right policy for Enterprise Britain. He will also be supported by the brilliant Yvette Cooper who, of course, is both Shadow Home Secretary and his wife.
Enterprise Britain is being slaughtered by the cost-cutting mania which George has told Dave to undertake. Dave has instructed the Cabinet (on advice from the Governor of the Bank of England) who, to a Minister, repeat it to anyone who will listen: “It is all Labour’s fault: we are in a deep financial problem!”
In a marvellous article in ‘The Daily Telegraph’ (22.1.11) Peter Oborne explains how Balls has reflected on the 1930s and the advice given by the Governor of the Bank of England, Montagu Norman, to Labour leader Ramsay MacDonald. As a result he slashed expenditure but the private sector failed to respond. The country faced years of unemployment and austerity as a result.
Balls is convinced that George’s budget cuts may have a similar effect.
The current situation remains worrying. The small-cap equity markets are reflecting a continued lack of IPOs (AIM is mainly serving international natural resources companies). The banks are not willing to offer higher risk lending and Metro Bank, for all its vision, is unlikely to correct that problem. Government support is either meaningless or worse.
So, is Ed Balls right? He most certainly is correct in his analysis of the threats to the UK economy. But will pain equal gain, as George believes?
I recently asked a senior member of the House of Lords whether, in his opinion, the bond market would have supported Alistair Darling’s spending plans and his proposals for the rate of cutting the debt position. His answer: “Without a doubt, yes.”
Ed Ball’s mentor, Gordon Brown, believes that the key to global recovery lies in the major Eastern countries, and in particular China and India, allowing a consumer boom to provide the stimulus for world trade. GB believes that the US and Europe will not offer the same remedy.
In the near future Ed Balls, who is occupying the room next to Ed Miliband, will need to conform to the commitment he has made to promote Alan Johnson’s spending plans. If, however, in the unlikely event that Dave and George get some more, and continuous, good press, and Ed (Miliband) fails to ignite both his Party and its effective opposition, the gloves will come off.
It is just what Enterprise Britain needs.