Ed Balls economic policy speech: A response from Ryan Bourne

“Today’s speech by Ed Balls shows that the Labour Party still does not have a credible plan to alleviate the country’s structural deficit. His big idea – a temporary cut to VAT to boost growth – would no doubt be welcomed by many households. But the VAT rise is a crucial aspect of the Chancellor’s deficit reduction plan as it stands. For despite the Treasury’s rhetoric of spending cuts, the plan relies on increased tax revenues to the tune of £149.5 billion per year by 2014/15. A reduction in the VAT rate now would therefore risk undermining the credibility of the plan, which the markets and international bodies currently appear comfortable with.” Ryan Bourne, CPS Economic Researcher


To see the extent to which the deficit reduction plan relies on tax revenue increases, check out our factsheets on Government Spending and Government Revenues.


Over the next few weeks we will publish individual factsheets on the breakdown between spending cuts and tax rises and the differences between the Coalition’s plan compared with that of the last Labour government.

Date Added: Thursday 16th June 2011