The bruising Commons encounters between George Osborne and Ed Balls are often a pleasure to watch – albeit from a safe distance. And none more so than today’s bout, with its characteristic “rapier v sledgehammer” quality.
It was Balls who called the encounter through an urgent question to inquire about the loss of Britain’s cherished AAA credit rating. But it was Osborne who got to speak first.
The chancellor observed that the markets had not shown much volatility today, with 10-year gilts steady at 2.1 per cent and the FTSE slightly up. (He ignored the fact that at one point sterling hit a two-year low in reaction to the news.)
Waspishly, he observed that the downgrade was “worrying” to anyone who thought that Britain could run away from its debt problem. “On this side of the House we will not do that,” he said. All of the coalition’s problems (I paraphrase) were merely inherited from its predecessor, he added.
The situation had been caused by the “huge debts” that built up over the last decade in this country, Osborne continued. Moody’s had warned about the potential for a reversal of the commitment to fiscal consolidation: “You will not see that reversal of commitment from this government.”
It was then the turn ofBalls to rise from the opposition front benches, into the face of Tory MPs chanting “apologise, apologise”.
It was Osborne himself who had said that losing its credit rating would be humiliating for the government, the Labour bruiser pointed out. The coalition had promised that the electorate could judge it on several economic factors, the first of which was whether it would safeguard Britain’s credit rating, he added.
The entire ruse had been used as “cover” for the coalition’s desire to cut spending, Balls continued: “This downgraded chancellor” was in denial. “He used to say a downgrade would be a disaster – now he says it doesn’t matter,” he said, in faux astonishment. It was time for the chancellor to rip up his economic plans, he added.
In theory Balls should have a fair wind behind him, given the plain facts: in particular that the government is on track to borrow £212bn more than it had originally planned.
But Osborne has honed a potentially damaging counter-attack against Labour.
The chancellor suggested that Balls’ answer to the problem was more debt. “His answer to too much borrowing is to add to it,” he said. In a recent radio interview Balls had been asked whether a Labour government would borrow more and had been unable to deny it.
This theme will become increasingly repetitious ahead of the 2015 general election, you can be sure.