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Ed Balls and Co spent like drunken sailors before the recession struck

Tim Montgomerie

Interesting to watch Ed Balls today and his attempt to blame Britain's appalling deficit on the world recession. He cannot be allowed to get away with that lie.

This graph from Peter Hoskin shows that Labour was spending too much in the good years, when it should have been saving for a rainy day:


  • We were borrowing in good times and in fact had had a structural deficit (ie not related to prevailing economic conditions) for the seven years before the recession even began.
  • Labour entered the financial crisis with a larger structural deficit than France, Germany, USA, Japan, Italy and Canada.
  • The vast majority of the deficit - £123bn of the £156bn borrowed in 2009/10 - was structural.
  • By the time Brown, Miliband and Balls left office Britain had the largest deficit in the developed world.
  • National debt doubled during the Labour years.

Under any measure Britain under Labour did worse than other countries. Having gone into the recession unprepared we then suffered the longest recession of the world's twenty biggest economies and suffered the deepest in our recorded history.

The over-spending might have been half-excusable if things had got better but Britain slid down league tables for educational competitiveness. Youth unemployment soared. The welfare state became a maze of complexity. Extreme poverty grew. NHS productivity fell. Defence procurement became a shambles. Britain missed its green targets.


For those wanting more background on this I recommend Andrew Lilico's June 2009 Policy Exchange paper, Controlling public spending. The graph below captures how Government spending as a percentage of GDP took off in Britain much faster than competitor economies (we are the blue line):

Screen shot 2011-01-25 at 14.30.10

Andrew puts it this way:

"The main driver of the deficit rise was that Labour stuck with plans to raise spending considerably (plans set in 2007 - mainly driven by rises in health and education spending) even when it became clear that the economy was going south.  Now what the other guys say is that that means it wasn't the spending rises that caused the deficit, but the economy going south.  I say that is like the claim of a man who had planned to buy a ferrari hoping to win the pools, didn't win the pools but decided to go ahead with buying the ferrari anyway, and then said the reason he had a £400,000 debt wasn't that he had bought a ferrari - it was that he *hadn't* won the pools!"