The Labour leadership race is not a sideshow – the coalition government may not last the distance and the winner could become the next Prime Minister.
So we need Labour to elect a candidate with a grasp of basic economics and some integrity. If leadership contender and former economic secretary to the Treasury Ed Balls has one, he lacks the other.
Many Mortgage Strategy readers will have heard Balls’ preposterous performance on BBC Radio 4’s Today programme recently in which he ducked responsibility for his failures in office.
It was the Balls-Brown economic model that flooded the economy with dangerously underpriced debt. This set the government and the economy off on a debt binge and we are still seeing the ramifications.
On the programme Balls denied that Labour borrowed too much by pointing to net debt rather than the national deficit. The scandal is that the UK deficit was 3% of gross domestic product even in the boom years. If you enter a recession like that you end up with a big problem.
When presenter John Humphries asked Balls if he was responsible for borrowing too much he replied that the UK went into the downturn with a lower level of national debt than France, Germany, the US and Japan.
Fortunately, Humphries had McKinsey’s estimates to hand, showing the UK’s debt to GDP ratio at the time was, in fact, the highest in the world.