We hate to say it, but all the evidence proves that Ed Balls was right about the UK (and global) economy

They do say that when you when you get a gaggle of economists together they won’t agree about anything: who they are, what they are, where they are and what they just ate with their coffee.

The Western world has never been more afflicted by economists and, just a year ago, they were all recommending sharp doses of austerity to reduce the debt that had been passed on to governments as the cost of bailing out the banks (and the heavily-indebted consumers) in the financial crisis of 2008.

But now it’s dawned on these wizards that, if you don’t have any income, you can’t pay down your debts.

And growth in the worldwide economy is grinding to a halt as higher taxes, bigger debt repayments, shrinking private sectors and growing unemployment take what’s left of the global economy’s petrol out of the tank.

The effect is compounded of course by idiot traders at banks, hedge funds and commodity traders who like nothing better than to bet against whole countries and, ultimately, the world.

Former chief secretary to the UK treasury Ed Balls, Labour PM Gordon Brown’s chief sidekick, has been saying this for the last two years but Balls, now Labour shadow chancellor, is discredited because, with Brown, he engineered lots of disastrous top-down economic solutions (like the disastrous Private Finance Initiatives) which have come back to haunt us.

But when Labour left government the economy was actually growing pretty fast, showing the classic sharp upward curve of an economy coming out of recession.

Now, In Britain as well as the rest of the world, growth is slowing to a standstill as governments cut and still expect there to be some growth from somewhere.

The hapless Greeks are the most obvious case in point: they’re being impoverished by cost-cutting measures and higher taxes that they just can’t afford on the instructions of the ECB and the IMF. So you have the completely ridiculous spectacle of the Eurozone (of which Greece accounts for about two per cent, about the size of Munich) and even the global economy (of which Greece accounts for about 0.001 per cent) being destabilised by – Greece!

Balls has said that we need to cut the deficit but over a longer period – and spend some more in the meantime. New IMF managing director Christine Lagarde (pictured) says the same some of the time but meanwhile she witters on about banks going bust and all the rest of it. Christine is not being as smart as this column thought she might be.

Balls is right. In the UK we need to spend, spend, spend otherwise the economy will go into reverse and it’ll take years to get out of it. Chancellor George Osborne, deputy PM Nick Clegg and chief secretary Danny Alexander say the current policy (cuts and more cuts) is irreversible. But this lot probably couldn’t muster the economic knowledge to secure an AS Level in the subject between them.

John Maynard Keynes is the answer but he’s regarded as a Leftie these days (actually he was a Bloomsbury dilletante) so he won’t be on George Osborne’s reading list.

The phrase ‘tipping point’ is one of those awful Harvard Business School constructs. But, in terms of the global economy, we’re at one now.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.