24/Apr/2014 - Last News Update: 23:35

Ed Balls warns of cuts 'catastrophe'

Category: Business

Published: 20th May 2012 11:21:05

Labour's Ed Balls has warned the world economy faces a "catastrophe" unless Germany abandons pressure on eurozone countries to cut public spending.

Speaking on Sky News, the shadow chancellor said David Cameron must urge leader Angela Merkel to change course.

Labour's former chancellor, Alistair Darling, has also warned that austerity could damage living standards.

But the prime minister has said he backs Germany's calls for "strong plans" for dealing with deficits.

The G8 summit of leaders of major economies has been discussing the ongoing crisis in the eurozone.

Mr Cameron said the countries in the single currency had to take "decisive action" to end the problems caused by high levels of debt in Greece and elsewhere.

Mr Balls said the eurozone had to make "tough decisions to get its house in order but not so much that it chokes off growth", adding that Germany and the UK's stance was at odds with that of US President Barack Obama and France's new president Francois Hollande.

He told Sky News: "Someone's got to persuade Germany that this will be a catastrophe for the world."

He also said Mrs Merkel's government had to "start letting the [European] Central Bank do their job" and start lending more money to stricken economies, such as Greece, Spain and Portugal.

Mr Balls also argued that the best way to grow the economy out of difficulty and increase tax revenues was to invest in, rather than cut funding to, the public sector.

Mr Darling, who was chancellor from 2007 to 2010, told BBC One's Andrew Marr Show that the coalition's reductions to the public sector budget were hindering growth.

He said: "The economy was growing in 2010, but now we are back in recession, something I didn't think would happen."

He added that the coalition, when it came to power, had "trashed confidence" by comparing the UK's situation to that of Greece.

Mr Darling said the situation was "compounded by what's going on in Europe" but there would be no improvement "unless we've got a credible plan for growth"

But, speaking for the government, Health Secretary Andrew Lansley said the government backed deficit reduction and urged Mr Darling to "apologise" for the role of the last Labour government in increasing national debt.

Meanwhile, writing in the Sunday Times, Chancellor George Osborne has said eurozone countries "must either stand behind their currency or face up to the prospect of Greek exit with all the risks that could involve".

He added that: "Those countries with high deficits and low competitiveness need to carry on confronting their problems head-on."

On Saturday, Mr Cameron said: "I think the German chancellor is absolutely right that every country needs to have in place strong plans for dealing with their deficits."

He continued: "But clearly, just as Britain benefits from a strong government with a strong deficit reduction plan and strong banks but also an independent monetary policy giving us low interest rates, helping to push demand in the economy, so the eurozone, I believe, needs that approach as well."

Source:
BBC News External Link Show Citation

Latest News

Harvard Citation

BBC News, 2012. Ed Balls warns of cuts 'catastrophe' [Online] (Updated 20th May 2012)
Available at: http://www.ukwirednews.com/news/1429725/Ed-Balls-warns-of-cuts-catastrophe [Accessed 25th Apr 2014]

News In Other Categories

  • Scottish independence: Ed Miliband makes case for Union

    Scottish independence would leave working people north and south of the border worse off, Ed Miliband has claimed.
  • Barclays in $280m settlement with US regulators

    Barclays agreed to a $280m (£167m) settlement with the US Federal Housing and Finance Authority (FHFA).
  • Ditchling Museum and Tate Britain vie for Art Fund Prize

    A village museum in East Sussex will go up against Tate Britain and the new £35m Mary Rose Museum in a contest to be named the UK's museum of the year.
  • Bristol Academy extends reach overseas with first foreign students

    With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com
  • Amazon revenue up but offset by increasing expenses

    Internet retailer Amazon reported a 32% jump in profits to $108m (£64m) in the first quarter of 2014.
  • Hillsborough Wikipedia changes: Government promises 'urgent inquiries'

    The government says it is making "urgent inquiries" into reports Whitehall computers were used to make insulting comments about the Hillsborough disaster.