“The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery. Fiscal tightening will dampen short-term growth but not stop it as other sectors of the economy emerge as drivers of recovery, supported by continued monetary stimulus.”
This really couldn't have come at a worse time for new Labour leader, Ed "better than my brother" Miliband. Deficit denial may have been a position that got him the backing of the Unions and therefore the leadership, but it's looking increasingly delusional and he must now be able to see that it's an untenable position to maintain any longer.
Look out for a humiliating climb down over the next few weeks/months. If he gifts the Shadow Chancellorship to his brother he can at least make it look like a concession to his defeated sibling, in the name of party unity. But it's by no means certain brother David will accept the offer.
Surely now, Ed Balls has no chance of replacing poor old Alistair Darling. Darling's plans were woefully inadequate, leaving the government spending at a level that continued to add to the already enormous mountain of debt wracked up by Labour, even after a whole parliament. But the Eds (Balls & Miliband) seem to think even Darling was too prudent. Why not draw down a few more £100 millions on the old over-draught, if it means a few extra votes?
But Ed is not stupid. He did what he had to do to beat his brother and get elected, now he has to face up to the real world. It's difficult to see how he can change course without looking chameleonesque - saying one the to Labour and the Unions and another the the general public, but not changing his mind is worse in the long run. Unless, that is, the global downturn we've seen evidence of recently in the US and Ireland, leads the UK into another recession (no matter how short). Even though such an event would have happened regardless of government, Labour will portray it as the result of cutting public expenditure. Because for them public spending = the economy.
The IMF believe a double dip recession is very unlikely but point out that the global economy can be unpredictable.
Unless he changes course on the economy, Ed Miliband must hope the unlikely double dip comes to pass and that the British electorate will be gullible enough to believe his diagnosis of the cause. Otherwise, at the next election, he'll continue to look as irrelevant as he and his party does today.