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It is interesting that George Osborne and Ed Balls have interpreted the Moody’s news release completely differently to support their own political cases.
For me, Osborne’s original case was based on Public Sector cuts (viz. austerity) being offset by Private Sector growth, and most importantly, the greater contribution of growth reducing debt levels. Unfortunately, Osborne has done little to stimulate growth, and given weakening uncertainty and weakened demand from the rest of Europe, growth has not happened.
To be fair to Ed Balls, he has consistently argued in favour of stimulating short-term term demand and investment (a more Keynesian approach), addressing indebtedness more in the medium term. Balls position is favoured by many leading economists, the IMF and think tanks.
So on balance, I am now paying more attention to Ed Balls, than George Osborne – a sad state of affairs for a life-long Tory supporter!
A final thought – both George Osborne and Danny Alexander are not trained economists, so one wonders who is advising them?