If the OECD is a source of "wise advice", maybe Ed Balls should listen to it?

May 26, 2011 10:08 AM

In an interview with the Times this morning, the OECD chief economist Pier Carlo Padoan said that "if there is not so good news on the growth front" the Government might have to reconsider its spending plans.  Ed Balls has got very excited about that and said "it’s now time George Osborne listened to wise advice" and reconsidered the fiscal adjustment.  Unfortunately for the Shadow Chancellor, the OECD has made clear that, on the current data, they think that planned spending cuts are necessary.  Just yesterday they published their Economic Outlook, and said:

"The current fiscal consolidation strikes the right balance and should continue in line with the government’s medium-term plan to eliminate the deficit, while allowing the automatic stabilisers to work."


There hasn't been a rush of new economic data overnight which has led to a Damascene conversion at the OECD.  They've clearly been asked a question by the newspapers about what their recommendation could be in certain, currently hypothetical, circumstances.  If Ed Balls appeals to their authority then he is going to have to accept that the institution currently backs the fiscal adjustment.  Otherwise he is going to have to set out why exactly the organisation is wise today but was foolish yesterday.In an interview with the Times this morning, the OECD chief economist Pier Carlo Padoan said that "if there is not so good news on the growth front" the Government might have to reconsider its spending plans.  Ed Balls has got very excited about that and said "it’s now time George Osborne listened to wise advice" and reconsidered the fiscal adjustment.  Unfortunately for the Shadow Chancellor, the OECD has made clear that, on the current data, they think that planned spending cuts are necessary.  Just yesterday they published their Economic Outlook, and said:

"The current fiscal consolidation strikes the right balance and should continue in line with the government’s medium-term plan to eliminate the deficit, while allowing the automatic stabilisers to work."


There hasn't been a rush of new economic data overnight which has led to a Damascene conversion at the OECD.  They've clearly been asked a question by the newspapers about what their recommendation could be in certain, currently hypothetical, circumstances.  If Ed Balls appeals to their authority then he is going to have to accept that the institution currently backs the fiscal adjustment.  Otherwise he is going to have to set out why exactly the organisation is wise today but was foolish yesterday.

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