Andrew Neil: Ed Balls good to have you back so soon but we had the –

Ed Balls: Well George Osborne’s come out, I suppose I should too.

AN: Exactly and you’re not so much of a submarine, we see more of you. Now the Chancellor said on Andrew Marr this morning that the economy has been weakened by the Eurozone crisis, high oil prices and a bigger than expected dampening effect of the deficit and all the debt. Do you deny that these are important factors in our economy?

EB: Well did he mention the snow, or the royal wedding? Of course those are factors but two years ago George Osborne made a judgement and I said, and some economic commentators did too, that that judgement was the wrong judgement. He said, cutting further and faster would secure the recovery, get us out of the danger zone. We’re now back in recession. His judgement’s wrong, his plan has failed and that is the reality of where we are.

AN: But these are surely – I mean you may be right on that but these are also important contributory factors, partly because they’re affecting all of Europe. Everywhere in Europe is now slowing down, even Germany.

EB: But I warned two years ago a global hurricane was brewing, particularly in the Eurozone. That was not the time for George Osborne to bet the farm, to dismantle the foundations of his own house. That’s what he did and he said he was right. And what’s happened now is as the Euro storm has built in the last few months – look – we’ve been in recession in the domestic economy now for pretty much a year, before the Eurozone crisis. You can’t blame the Eurozone for a recession made in Downing Street. It’s not about communication, George Osborne can’t get out of this with more spin doctors, it was judgement. His plan’s failed and it’s also been proved to be unfair as well as bad for jobs and growth.

AN: I want to come back to the economy later, but on the reform of the House of Lords going to be a big part of the Queen’s Speech we’re told. The government – there are signs the government is heading in the direction of a referendum which is what you want. If you get a referendum will you campaign for a yes vote?

EB: I will campaign for reform of the House of Lords, absolutely. We’ll need to see what reform exactly means.

AN: But you want an elected chamber?

EB: I voted for 50, 60, 80% last time round. I think we need democratic reform of the House of Lords, no question about that, but Andrew, today is it the biggest priority?

AN: No, I understand that.

EB: Pensioners paying more tax, the economy in recession, is that really the biggest priority? It’s not going to save the coalition.

AN: But if offered an elected second chamber you’ll vote yes.

EB: Yes.

AN: Okay. Let’s move on to the election results. They were good for your party and let’s just take a look at some of the figures to try and put it in to some sort of mid term performances, because you got about 38% of the vote. In ’86 Neil Kinnock, 37, William Hague 38 in 2000, Michael Howard, 38 in 2004. Every one then went on to lose the next General Election. You haven’t got this in the bag by any means have you?

EB: No, of course not. They were good results, they’re no reason for complacency. It’s a concern that lots of people who are very disillusioned with the Conservatives and the Liberal Democrats were staying at home. Turnout was down. We’ve got more work to do to regain trust, but don’t forget in 1999, 2 years in to the Labour government, we won the local elections clearly. This is not just midterm blues, this is actually – and you see this in the Conservative Party reaction, you can see David Cameron and George Osborne so rattled today, because this is quite deep. It’s about an economic failure of judgement and this sense that these Conservative leaders are out of touch and making the wrong calls on tax and fairness in the economy.

AN: But can we agree that your performance, though good, is not out of kilter. There’s nothing exceptional, it’s in line with the regular midterm performances?

EB: Well, the Conservatives were comparing this on Thursday and Friday to 1996 for Labour or to 2007/8 for the Conservatives, both times they had been in opposition for ten years before those local elections. We’ve only been out of power for two years and we did badly in the General Election. So actually if you’re back in the lead, winning the arguments after two years is good, but does it by itself guarantee an election victory? No, it doesn’t. There’s more to do. But I think for the Conservatives this is much deeper than mid-term blues.

AN: OK, I want to stick with Labour though…

EB: That’s fine.

AN: … because one of the things that was impressive about Labour’s performance was that you are the only national party now. That the Labour brand still works across the country, even in the south you made some gains.

EB: The East as well.

AN: Why did you therefore fail to win London?

EB: I think in the GLA elections, the actual popular vote for Labour versus Conservatives we won.

AN: So why did you fail to win the Mayor’s office?

EB: Because there was a personality contest between Ken Livingstone and Boris Johnson and Boris Johnson just squeaked it. I think it’s partly that people were judging it on the basis of, you know, personality and joke cracking and all that kind of stuff.

AN: Was Ken Livingstone the best candidate for Labour?

EB: I backed Ken Livingstone. I think he was the best Mayor we’ve had so far. I think he’d be a better Mayor than Boris Johnson. I think many Londoners thought that. Not quite enough. But as you said…

AN: Was he the best candidate? I mean you won London, this is a Labour city we’re in at the moment. You won the London Assembly, you couldn’t win the Mayoralty, he must have not been the best candidate?

EB: The thing is in the end though, if you look at houses in London, the South Bank regeneration, Ken did these things…

AN: So why didn’t people vote for him then?

EB: Because in the end they didn’t think – I mean it’s interesting, if you’d had an elected Mayor in Leeds or Birmingham they’d have had far more power than an elected Mayor in London. Many of the tax raising powers are actually with the boroughs. Boris Johnson, I have to say if I was Boris Johnson looking at these results, I’m not sure if I’d be quite as –

AN: No, but he won and can we agree on one thing? If another Johnson had been standing here he’d have walked it. Called Alan Johnson.

EB: Look, who knows, who knows

AN: Right?

EB: Who knows, who knows

AN: OK.

EB: The important thing which I’m not going to glide over, is we won Norwich, Thurrock, Harlow…

AN: No, I’ve given you all that.

EB: The south and the east. People said, Labour couldn’t win in the south. David Cameron can’t win in the north, Labour’s winning in the south, that’s a big difference.

AN: I’ve given you all that. Let’s –

EB: I know, but I was having it again!

AN: No, I know that. You’re like Boris Johnson, you’re in favour of having your cake and eating it. Let’s move on.

EB: I think Boris has eaten even more cake me though, don’t you think?

AN: Well that’s cos you’ve been doing the Marathon. Let’s have a look at something.

EB: The Marathon, not a sprint.

AN: This is what the Chancellor had to say in his article in the Mail on Sunday today. This is what he said: ‘Balls and Miliband, they’re like a pair of heavy drinkers, trying to wash away problems by opening another bottle.’ Will your thirst ever be quenched with more public spending?

EB: Look, George Osborne’s looking a bit rattled today isn’t he and you learn with David Cameron and George Osborne when they’re rattled and under pressure they always get personal, they always lash out, but the country agrees we need a plan to get the deficit down. I agree with that, we all agree with that. If George Osborne thinks that’s a vote of confidence in him he’s making a big mistake. Because the country also knows his plan has failed and the public are now saying where’s the jobs? Where’s the growth? This is not about communication, it’s not about spin, that is very complacent from George Osborne. People want a plan which will work and they’re all saying too as well you’ve cut the top rate for millionaires and put up taxes for pensioners and families, that’s not fair either.

AN: All right. If we want to look at an alternative can you flesh it out a bit? Can you answer the question you wouldn’t answer when you were last on this programme with me? How big would the fiscal stimulus be if you were in power? How much extra would you add to the deficit?

EB: Well, look I’m not going to reduce this to simplistic slogans and one year plans. It’s actually about what would happen in the economy over three or four years. George Osborne is borrowing to play for unemployment. I say a job’s plan, a VAT cut, bring forward infrastructure, would actually be better over three or four years at getting the deficit down.

AN; But how much would it add to the deficit?

EB: Well, George Osborne’s borrowing £150 billion more than he planned because he’s failed on the economy. In the end, this austerity doesn’t work. It’s self defeating. Even the head of the European Central Bank is now saying you need a growth plan in the Eurozone.

AN: Ah, but he’s talking – well we’ll come onto that, but he’s not talking about the kind of growth plan you want. He’s talking about labour market reforms. Let me ask you this again –

EB: Are you sure, are you sure?

AN: We’ve come on for a second time. How much would the deficit go up in the early years? Go on tell us.

EB: We’d have a VAT cut.

AN: No, we know all that, how much?

EB: which would cost us £12 billion.

AN: No, we know all that, how much? How much?

EB: I’ve not costed the whole programme, because it would depend on how much infrastructure we can bring forward, but George Osborne’s plan means more spending, less taxes and more borrowing. Over three or four years we would get the borrowing down faster than George Osborne because our plan would work. That’s what America has proved, that is what Britain would do.

AN: But it’s truly at least a legitimate concern that any departure from the current policy would spook the markets, push up interest rates, undermine sterling. I mean there is a risk. It’s not risk free what you’re saying.

EB: Well the current plan has failed, that’s a problem for George Osborne

AN: But your alternative’s a risk.

EB: The current plan has failed. And George Osborne has spent two years and David Cameron, saying, any change of course will make things worse. If you’re in a hole you should stop digging. You should listen to the International Monetary Fund, the OECD. You should look at examples of countries around the world. A more balanced plan, boost for jobs and growth, tough decisions on spending and tax, would actually get the deficit down. He’s failed on jobs, he’s even failing on borrowing, Andrew, that’s his problem. This is a failed plan. We’re back in recession.

AN: Hollande is probably going to be elected in France today, we’ll see. He’s kind of singing from your song sheet? But what bits of Francois Hollande’s economic policy do you disagree with?

EB: Well look the problem Francois Hollande has got is that in the context of the current Eurozone policy, a European Central Bank not working, a fiscal compact which is crucifying growth and jobs, it’s very hard for Francois Hollande himself to take a difference course. I’m very concerned – look

AN: So what bits do you disagree and agree with of his policy?

EB: Well I agree with him and I’ve had direct conversations with him with Ed Miliband that we need to change the direction of policy in the Eurozone. Without that, it’s very hard for France alone to make a difference. That’s the difficulty. I don’t think it’s actually in his gift, and to be fair President Sarkozy a year ago was saying to Germany, you’ve got to change course on austerity. You’ve got to get the ECB working, it’s not happening.

AN: Well Mr Hollande would add an extra 20 billion Euros to government spending over five years. Is that a good idea?

EB: Well, I think if it gets the deficit down, if it gets jobs and growth moving…

AN: Well obviously you don’t get the deficit down if you’re adding 20 billion to spend.

EB: We’ve had this conversation before Andrew, so many times. George Osborne’s plan means £150 billion more borrowing, because unemployment’s up, growth is down and if you choke off the recovery, if you’re back in recession, if people aren’t paying taxes anymore you make your borrowing worse, and that’s the economics of this. I know you don’t like this but it’s true.

AN: But if Mr Hollande gets in and he does a Gaelic version of the Ed Balls’ stimulus plan and if he then falls on his face, your position becomes intellectually bankrupt?

EB: But as I said to you, the problem for France is it doesn’t have its destiny in its own hands because of the single currency. In Britain we don’t have to have French, Spanish, Italian problems, because we’re outside the Euro, we actually could have a devaluation of sterling. George Osborne’s imposed upon Britain the policies of the Eurozone. That is his big mistake. The problem for Hollande is he can’t actually do this unless he persuades Germany in particular and the ECB to change course. If that doesn’t happen I’m fearful that we may see even with a Socialist President in France continued stagnation in the Eurozone for a few more years.

AN: Who do you think will mug Mr Hollande first? Will it be Mrs Merkel or the bond markets?

EB: I think French leaders in the last few years have had huge problems with German politics and I think that is at the heart of this. The Germans went into the single currency on the basis they weren’t going to bail out Italy and Spain. Unless Germany stands behind Italy and Spain this crisis is going to continue and it’s very hard for any political colour of government in France to buck that trend. We’re sort of in a similar position here. George Osborne, Mrs Merkel, both digging a hole, both making some things worse. This austerity is self defeating, their plan’s failing, in Britain you’ve got the added problem of pasties, granny taxes, top rate of tax cuts for millionaires as well.

AN: I was wondering when you’d work that in. You got it in in the final five seconds. Ed Balls thanks. Come back, come back for the hat-trick.

EB: Well listen, I won’t come back next time George Osborne’s out because that might be months and months and months. Maybe I’ll have to come back more recently than that.

AN: Ed Balls, thank you very much.

ENDS

David Dimbleby: How do you feel about these results that have come in?

Ed Balls: They are good results but they show that we have got more to do, to be honest David. We’ve won councils across the south, the eastern region, Birmingham, done brilliantly in Wales. We’ve taken lots of gains. Congratulations to those new councillors. But there is more to do because there are still people who voted Conservative and Liberal Democrat at the last election who chose this time to stay at home and we need to get that turnout up in the next few years as we build to the general election. What is clear, though, is there’s people who were told two years ago by David Cameron and George Osborne ‘we’ve got a plan on the economy and it will be fair’, and people are now saying the plan has failed, the economy is back in recession, unemployment high. And fairness? That Budget was so unfair three or four weeks ago. I think for the Conservatives this is really quite a big day because I don’t think this is mid-term blues. But for Labour it shows us there is still a challenge there, we’ve got to keep working hard.

DD: You have to convince people not just the Tories have got it wrong but that you have got it right?

EB: That’s right and the fact is, after that [general] election result, after the global recession, people wanted to give the government the benefit of the doubt. And as, month-by-month, the economy’s flatlined, back in a double-dip recession, people are saying well the government has failed and they are unfair and out of touch. We’ve got to win their trust, we’ve not just got the right values, the right leader in Ed Miliband, but also that we can make the tough decisions on spending, get the economy moving, get the jobs and growth without which we can’t get the borrowing under control. So there is a task still for us but it is definitely made easier by what is I think quite a seismic failure over the last month or two from David Cameron and George Osborne and I can see why Conservative MPs are worried about that now.

DD: Would you, as a socialist, endorse and support and look to the possible victory of Hollande in the French elections as something that you will be able to point to if he wins for what Labour would do in Britain? In other words, there is a template for people to have a look at and decide whether it works better?

EB: Well look, there is already a template in America where they have taken a more balanced approach on the economy, where President Obama had a jobs plan and that’s led to recovery and falling unemployment and them getting their deficit down faster than Britain. That is the route that Francois Hollande wants to take. I think at least as significant was that even the President of the European Central Bank last week was saying we need a plan for growth and jobs. He’s right. And what do we hear from David Cameron today? I’m going to plough on with my same plan. His plan is not working. George Osborne has got this wrong. It’s unfair and it is failing. And I think the debate will change over the course of this year in Britain and around the world. People will say austerity when it is extreme becomes self-defeating, crushes our economies, is unfair, but also bad for jobs, growth and the deficit. I do think it has been hard for us in the last two years, but as the coalition fails on the economy there is a big opportunity for us to say we can clear up George Osborne’s economic mess but do it in a fairer way and a better way for the future.

DERMOT MURNAGHAN: Well now, if you believe the polls, Labour are storming ahead of the Conservatives and the Liberal Democrats but not on the economy. Labour’s two Eds cannot persuade the public that they could get us back on track more quickly than Dave and George so why not? Well let’s say a very good morning to the Shadow Chancellor, Ed Balls, and if I can start first of all Mr Balls with the Prime Minister’s reassurances about Jeremy Hunt, the Culture Secretary. You have called, Labour has called for his resignation of course but the Prime Minister has said that really the Leveson Inquiry should not be pre-empted and he doesn’t feel at the moment that Mr Hunt broke the ministerial code.

ED BALLS: Well the Prime Minister is refusing to investigate whether the Ministerial Code was broken and the code is very clear. If there is an allegation and a doubt – and there is because Jeremy Hunt clearly misled Parliament on information, he was clearly a party to this bid when he should have been objective – the Code says the Prime Minister will refer this, it should go to Alex Allan, it should be investigated now. I’m afraid the Prime Minister is trying to brush this away, push it into Leveson because he is afraid of the scrutiny of that investigation, and because he knows that the allegation of side deals with News International is about Jeremy Hunt and the Prime Minister himself. That is the charge and I have to say to you Dermot, if the Prime Minister put the same energy into defending hundreds of thousands of jobs up and down the country as he is putting into Jeremy Hunt, one person in his Cabinet, then on the economy he might not be losing trust so quickly.

DM: OK, nice segue into that, we’ll be talking about the economy in great depth in a moment or two but just on Hunt, do you not feel that the Leveson Inquiry, as the Prime Minister says, as we all know, is a judicial inquiry and will get to the bottom of things? Look at the way it’s been delving into email and text exchanges between so many of the great and good.

EB: Look, even the Leveson Inquiry itself has said it’s not its job to decide on the probity of one individual minister and whether they misled Parliament, that’s the Prime Minister’s job and he should abide by his own code. It doesn’t say that the Prime Minister might refer it, it says he will refer it. Look, Jeremy Hunt I’m afraid has not acted in an objective way. These emails in advance of the BSkyB decision, a multi-billion pound deal of which he was the decision maker, this is like a high court judge the day before the trial, texting and emailing a defendant to check how he’s doing and to reassure him it will all be OK. That is not proper, it is an abuse of Parliament and it should not be pushed into Leveson. The Prime Minister should take some responsibility for his cabinet. I’m afraid Jeremy Hunt’s position is untenable but this is a Prime Minister who knows actually it’s not really about Jeremy Hunt, it’s about David Cameron and George Osborne, the conversations that they had, the deals that they struck, it comes back to the very top of the Conservative Party and that’s why the Prime Minister is desperate to push this away and try to prevaricate but the country will just think this is not a way to run a country.

DM: OK, you think it’s a bit of a smoke screen as well, covering up the economic performance in a double dip recession it was announced last week of course. Labour now has, according to the latest poll, an eleven point lead over the Conservatives yet within that poll it says your prescription, Labour’s prescription on the economy is still not the one most preferred?

EB: Well as you know, Dermot, these polls are changing month by month. Two years ago Labour didn’t win the election, George Osborne and David Cameron said we’ve got a plan which will work and I think many people said let’s give them a chance, give them the benefit of the doubt and they said we’ll secure the recovery, we’ll get the deficit down, we’ll get unemployment falling. What we saw finally last week is absolute clear evidence we’re back in recession, unemployment’s high, borrowing is much higher than they planned and at that moment people will start to say, as they already are: what is the alternative, can Labour be trusted to make the difficult decisions in the face of this Cameron-Osborne failure, a recession made by them in Downing Street? I look at these polls and think there is a long way for us to go, the small parties are still doing too well, we’ve got a lot of work over the next couple of years to build that trust but for David Cameron and George Osborne this is a catastrophe. In the last month, on the economy their competence in tatters but also people saying, look, they said ‘we are all in this together’, this is the same old Conservatives cutting taxes for millionaires and putting taxes up for pensioners and families. It’s unfair and it’s not working. This is a very important moment in this parliament but Labour has got a lot of work to do, you’re right about that.

DM: Well I mean, you’ve said it yourself really, haven’t you, a lot of work to do. Is now not the time then to set out a clear long-term vision of where you want to get to rather than odd bits of policy here and there, perhaps particularly coming from your department?

EB: Well I talked today in The Observer about the dangers of a lost decade, years of slow growth, of high unemployment, people paying a long-term price in their living standards but also mass youth unemployment lasting for years. We pay a long-term price for that, we’ll end up with fewer people going to university, fewer investing in skills and technology so we need to act short and long-term to turn that round and here’s what we should do. Right now the government must come forward with a plan for jobs and growth to get the economy moving: a cut in VAT, bring forward infrastructure projects, repeat the bank bonus tax for youth jobs, a cut for small firms taking on new workers, a VAT cut to help small businesses doing repairs and maintenance – five things which could be done right now to get the economy moving, to get unemployment falling, to get borrowing coming down and then also we need a long-term vision for the future about how we have a stronger, fairer and investment rich economy. Now there is a big debate happening in Britain. If you look at the last couple of days there are Conservatives on the right of the Conservative Party saying the answer is more tax cuts and deregulation, Boris Johnson said that today …

DM: Hold on, you just talked about more tax cuts, a VAT cut and a National Insurance cut, that’s not that different to what we’ve been hearing from the likes of Liam Fox and Boris Johnson today?

EB: Look, Boris Johnson, Liam Fox and I agree that we need a tax cut to get the economy moving. It’s only David Cameron and George Osborne who say it’s not working but we’re going to plough on regardless. If you’re in a hole, Cameron and Osborne, stop digging. That’s what Liam Fox and Boris Johnson are saying, as am I. There is then a debate though about what is the best tax cut and I have to say for Boris Johnson to say the priority now is only to cut taxes for people above £150,000, that’s not fair and some on the right say just deregulate, make it easier to hire and fire people. I think we need investment in science, investment in infrastructure, a youth jobs plan, I think we need a long term British Investment Bank to get funding for small firms but even though I disagree with Boris Johnson and Liam Fox’s prescription, we agree we must do something. David Cameron today is saying the economy is the most important thing but he is doing nothing about it, he has nothing to say, his plan’s not working and he is ploughing on regardless.

DM: Well let me put more to you about how much closer you probably are to elements of the government’s position than you’d claim because presumably on the long-term future you agree with this aspiration of rebalancing the economy in so many ways, between the south and the north and away from financial services towards manufacturing and exports?

EB: Well I want a balanced economy of course and that means more investment in manufacturing. I think financial services are very important but so are other services, media, education, skills in IT, all those kinds of areas. We agree on the vision but you don’t get to a more balanced economy by cutting investment in science, cutting investment in universities, mass youth long-term unemployment, the economy stagnating for year after year and underneath that there’s a deeper point. David Cameron and George Osborne believe if the government just walks away, cut public jobs, cut public investment, somehow the private sector will just get on and create the jobs but the private sector needs decent transport, decent skills, good universities, investment in science. The private sector is so unconfident at the moment because the government is walking away from the things that will make a difference to growth and jobs for the long-term.

DM: But you know, because you understand the figures most than most don’t you, you know that in reality this government hasn’t cut at all in terms of spending, it’s last financial year 696.4 billion, Labour’s last one in office 669.7 – it is spending 4% more than you were, the cuts aren’t there.

EB: Well that’s partly because they made inflation so high above 5%. These are real term cuts …

DM: But allowing for inflation it is a 0.8% cut…

EB: Exactly

DM: … which is exactly what Alistair Darling was talking about.
EB: And there is a deeper point here because the government, there is no doubt they have cut investment in new school buildings, they have cut tens of thousands of public sector jobs, they’ve cut support for services up and down the country. Their problem is they are spending a lot more than they planned on unemployment because it’s so much higher, while the taxes aren’t coming in from people who are out of work. The reason why this is so self-defeating, the reason why they are borrowing £150 billion more is because if you flat line the economy, put it into recession, you spend and borrow for the wrong things. I say if right now you cut the taxes and do some spending on things which will make a difference now, over the next one, two, three, four years you’ll actually get the borrowing down by getting people into work, paying taxes and making our economy stronger, not weaker, for the long-term. That is why the Osborne plan is such a catastrophe, he doesn’t understand the economics of this at all and that’s why it has blown up so badly.

DM: OK, well that’s the Balls plan and the Labour plan on the economy, in terms of this lead and it has been consistently building for some time now, do you put it down to the appeal of your leader?

EB: I think that Ed Miliband has done really well over the last eighteen months, in particular on pointing out the need for action on high energy bills for pensioners and families, on saying that we need fairness in our tax system but we also need a jobs plan for young people, repeat the banks bonus tax for youth jobs. He has also led the debate over the past year saying we need to clean up our politics as well, including party funding. But Ed and I would be the first to say there is still a lot more for us to do to rebuild that trust, for people to see we’ll make the tough decisions, for people to see that Labour has got a detailed plan for the economy and for the future but the one thing you can definitely say in the last month, six years of David Cameron trying to say I’m a compassionate Conservative, completely collapsed in three or four weeks. They failed on the economy and they are now so unfair as well and it just looks a little bit sleazy, don’t you think, Dermot?

DM: Well, that’s for others to judge. For you to have cemented this recovery you have to do well in the upcoming elections, the mayoral elections, London of course perhaps the most high profile of that. Do you think your candidates in the London elections is going to make it or do you think it’s his tax affairs which is letting him down and those tax affairs, are they something you would approve of?

EB: Well I think Ken Livingstone has been transparent, as have the other candidates equally about their tax affairs. It’s important that people pay the proper amount of tax and people have seen Ken Livingstone and Boris Johnson have both been paying a similar amount of tax overall. This is actually about who is going to cut the Tube fares, who’s going to create the jobs. Boris Johnson today is clearly very worried about the Cameron/Osborne failure hitting him next Thursday and is now out saying I’ve got an alternative plan. Bizarrely it’s not about jobs or Tube fares, it’s about cutting taxes at the top, I’m not quite sure what the politics of that is for Boris Johnson, I think he’s fighting a different election in the Conservative {arty to the Mayoral one. The other thing to day, Dermot, I’m in Norwich today, we’re hoping to make gains in Thurrock, in Harlow, in Ipswich, in Norwich, right across the east, the south-east as well as the rest of the country. This is not only about London on Thursday, this is about the rest of the country but in London I think Ken Livingstone will do a better job for Londoners than Boris Johnson and I hope people will see that on Thursday in the polls.

DM: OK, from the macro economy to campaigning in Norwich there, the Shadow Chancellor Ed Balls, thank you very much indeed.

Ed Balls MP, Labour’s Shadow Chancellor, responding to today’s US economic growth figures, said:

“The results of two different economic strategies are increasingly clear to see. By taking a more balanced approach over the last couple of years, with a jobs plan to support the recovery, President Obama has delivered a growing economy in America. But David Cameron and George Osborne’s self-defeating austerity policies have plunged Britain back into recession.

“In the 18 months since George Osborne’s spending review, Britain’s economy has shrunk by 0.2 per cent while America has grown by 2.8 per cent in the same period. That is why the US economy is now over 1 per cent bigger than before the global recession, while Britain is now over 4 per cent smaller.

“While in America there is disappointment that these figures are not even stronger and policymakers are rightly debating with urgency what more can be done to boost jobs and growth, in Britain our complacent and out of touch Government has delivered a recession but sits on its hands and offers more of the same.

“There do need to be tough decisions on tax, spending and pay. But cutting spending and raising taxes too far and too fast has badly backfired in Britain, with £150 billion of extra borrowing to pay for higher unemployment and economic failure.

“David Cameron and George Osborne must wake up to the reality of the double dip recession they have created. We need a change of course and a jobs and growth plan to get Britain back on track – and we need it now.”

Ends

Editor’s notes:

1. In the first quarter of 2012, the US economy grew by an annualised 2.2 per cent – or 0.55% on a quarter on quarter basis, compared to Britain’s 0.2 per cent contraction.

2. Over the 18 months, since George Osborne’s spending review the UK economy has shrunk by 0.2 per cent, while the US economy has grown by 2.8 per cent in the same period.

3. The US economy is now 1.3 per cent above its pre-crisis peak, while the UK economy is 4.3 per cent below.

Yesterday was a Black Wednesday for families, pensioners and businesses across our country as we learned Britain has plunged back into recession.

And let’s be clear, this is a recession made in Downing Street by David Cameron and George Osborne.

The Tories were told their reckless austerity policies would backfire. But they arrogantly refused to listen.

Last weekend the Chancellor boasted he could give £10billion more to the IMF to bail-out the eurozone because “we have sorted out our ­problems”. How out of touch can you get?

With this double-dip recession, the country is paying a very heavy price for David Cameron and George Osborne’s mistakes. Their credibility on the economy lies in tatters.

Mirror readers are right to be angry – because this was entirely avoidable. At the last election the economy was starting to grow strongly as we came through the global recession. There were difficult times ahead. But instead being clobbered with the biggest spending cuts for a ­generation, our economy needed to be helped to grow.

That is what President Obama did in America. He had a jobs plan to support economic recovery. That’s why America is now growing with more people in work, while Britain is back in recession.

The Chancellor has now run out of excuses. First he blamed the snow, then the Royal Wedding and now the eurozone. But the euro area grew twice as fast as Britain last year. And it was only exports to other countries that stopped us going into recession even earlier.

Of course, there have to be tough ­decisions on tax, spending and pay. But going too far and too fast has backfired on the deficit. Because if the economy is shrinking and there are more people out of work – claiming benefits and not paying taxes – the deficit and the debt get worse, not better. That’s why the Government is set to borrow an extra £150 billion and the reason why last month’s Budget was such a disaster.

Labour’s five-point plan includes taxing bank bonuses to fund 100,000 jobs for young people, tax breaks for small b­usinesses taking on extra workers and a temporary VAT cut to get money back into people’s pockets and jump-start the economy.

The longer this out-of-touch and incompetent government refuses to listen and sticks with its failed policies the more damage will be done.

David Cameron and George Osborne complacently boasted their austerity plan had taken our economy out of the danger zone, but their failed policies have plunged us back into recession.

We consistently warned that their austerity plan was self-defeating and that cutting spending and raising taxes too far and too fast would badly backfire. David Cameron and George Osborne arrogantly and complacently dismissed people who warned of the risk of a double-dip recession and the country is now paying a very heavy price. Their economic credibility is now in tatters.

The reason why last month’s Budget is such a disaster for Britain is not just because it unfairly cut taxes for millionaires while clobbering families and pensioners, it also failed to come up with the plan for jobs and growth Britain desperately needs and we have been urging.

Not only has our economy shrunk in the last two quarters – a 0.5 per cent contraction, which means we are in recession – but our economy has actually shrunk by 0.2 per cent in the year and a half since George Osborne’s spending review.

And far from the Eurozone being to blame for Britain’s woes, it was only growth in the EU and the rest of the world which kept us from going into recession earlier. Excluding exports, the domestic UK economy has now been in recession for over a year.

The Chancellor needs to explain why America, which has taken a much more balanced approach with a jobs plan to boost growth, has more than recovered all the output it lost in the global recession while our economy is shrinking again.

The price of this recession is billions more borrowing to pay for economic failure. The Government’s pledge to balance the books by 2015 is now in tatters and the next Labour government will have to clear up George Osborne’s economic mess.

The longer this out of touch and incompetent Government sticks with these failed policies, the more damage will be done.