Ed Balls is scheduled to make a statement concerning Labour’s plan for paying down debt. The party thinks that using cash from the sale of government holdings in banks is the best way to get control of the deficit.
Britain was forced to give trillions of pounds to banks during the 2008-09 financial crisis, but falling share prices this month are delaying the sales of government stakes in banks.
Labour vs. coalition
Ed Balls, Labour leader and ally of former prime minister Gordon Brown, warned of the “lost decade of economic stagnation” in this “spiraling global crisis” at Labour’s annual conference in Liverpool.
“We will commit … in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt,” Balls said in his speech.
In the current political climate, Labour is struggling to win the favour of voters, largely due to their economic policy that voters find less stable during fiscally uncertain times. The Labour vision for the economy has also traditionally wanted to reduce the budget deficit more slowly than the coalition.
Harsh austerity plans are now in place as government ministers use the debt crisis in both the euro zone and the United States as fuel to the cause. The current coalition government’s vision is to almost eliminate a deficit running around 10 percent of economic output by 2015.
Labour’s recovery plan
The Labour party says that the struggling UK economy can only bear half of what the coalition proposes, and points to the recent lack of growth in Britain to dispel thoughts that the austerity drive is working.
Balls says that Labour will outline and make known its fiscal stances before the next election. The party wants to reestablish its ability to lead and progress into growth after its time in power during the worst recession in recent memory.
“We will set out for our manifesto tough fiscal rules that the next Labour government will have to stick to – to get our country’s current budget back to balance and national debt on a downward path,” said Balls.
Another surprising move is that Balls says Labour would keep the financial watchdog, the Office for Budget Responsibility, which was introduced by the Conservative party.