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Ed Balls defends 'worst recession for 100 years' speech
SCHOOLS Secretary Ed Balls today stood by his controversial claim, recorded by the Yorkshire Post, that the world is going through its most serious global recession for more than 100 years.
The comments - easily the gloomiest yet from a senior minister - came in a speech to Labour activists in Sheffield at the weekend and led to opposition claims that the Government was sending out mixed signals about the prospects for recovery. Hear the speech
But Mr Balls, who previously served as Gordon Brown's chief economic adviser, insisted his message was no different from that of the Prime Minister, Chancellor Alistair Darling or the Chief Secretary to the Treasury, his wife Yvette Cooper.
The Schools Secretary told the BBC: "It was the same as has been said by the Prime Minister, the Chancellor and the Chief Secretary.
"It was very similar to what was said by (US) President (Barack) Obama yesterday and by the Bank of England.
"These are unprecedented times in global financial markets - the worst we have seen, I think, probably for more than 100 years, this global financial recession.
"The question is how do we respond? Do we stand aside or do we act?"
Speaking to Labour supporters in Yorkshire over the weekend, Mr Balls said: "We are now seeing the realities of globalisation, though at a speed, paces and ferocity which none of us have seen before.
"The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out."
The Normanton MP suggested the downturn could have similar political effects as the depression in the 1930s, which saw the rise of fascism across the world.
"The economy is going to define our politics in this region and in Britain in the next five years, the next 10 years and even the next 15 years," he told the conference.
"These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s and we all remember how the politics of that era were shaped by the economy."
Shadow Chancellor George Osborne said the remarks, reported in the Yorkshire Post, contradicted Treasury forecasts that the economy will be back on track by the second half of this year.
"This is a very worrying admission from a Cabinet minister," he said. "We are being told not only that we are facing the worst recession in 100 years, but that it will last for over a decade, far longer than Treasury forecasts predict."
Lib Dem Treasury spokesman Vince Cable contrasted Mr Balls' dire assessment with fellow minister Baroness Vadera's recent claim she could see "green shoots" of economic recovery.
Mr Cable said: "Instead of giving clear and consistent leadership, Government ministers are oscillating between complacent optimism and this doom-laden picture of Armageddon. Surely the truth lies between the two?"
The Prime Minister's spokesman rejected the suggestion that Mr Balls was sending out a more negative message than other ministers.
"Ed Balls was making two points," said Mr Brown's spokesman.
"One is the unprecedented global nature of this crisis - the fact that it is affecting virtually every country in the world, which is different from what we have seen in previous downturns and recessions of this nature - and also the speed with which it has affected pretty much every country in the world.
"And also, the fact that it is very heavily focused on the financial sector.
"Those are the two points Ed Balls was making. He wasn't saying anything beyond that."
Mr Balls took part in a discussion of the economic situation at this morning's weekly meeting of the Cabinet at 10 Downing Street, the spokesman told reporters at a regular daily briefing.
The Schools Secretary was backed by the influential Labour backbencher John McFall, the chairman of the Commons Treasury Committee.
Mr McFall told BBC Radio 4's World at One: "Actually I agree that this situation is really, really severe.
"Like the 1930s, we have a banking crisis here. We have a banking crisis, a liquidity crisis, a credit crisis.
"If we don't give the unvarnished truth on this matter, we are going to kid people on. It is very important we tell them that this is tough, it is going to be rough over the next few months, but we have got to work it out."
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Tuesday 22 May 2012
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