IMF vs Balls

The good news economically is that 400,000 jobs have been created in the last year and our economy is growing.

The less good news is that we are not growing as fast as some predicted. This poses a key question — is the Government reducing the deficit too rapidly?

Both the Coalition and Labour agree that the deficit (the amount added to our debt each year) must be tackled. The Coalition aims to eliminate it by the end of 2014. Labour says they would half it by then.

A significant difference you might think, however, due to the fact that slower deficit reduction means greater interest charges on the debt being racked up, the result is that Labour's proposal would actually still cut £7 for every £8 planned by the Coalition. So cutting more slowly would not provide a large fiscal stimulus but would unsettle the markets, leading to interest rate rises for our vital businesses and those on variable rate mortgages.

There is no shortage of pundits passing judgement on this issue. A group of 50 'so-called' economists released a letter just last week calling on the Government to change course.

I say 'so-called' economists as many were not actually economists at all but left-wing academics specialising in everything from cultural studies to environmental psychology — one is a former Labour MP.

Last week also saw the IMF release their annual assessment of the UK economy and insist that the Government should stick to its plans.

Economics is not a precise science, of course, but I would back the IMF over shadow Chancellor Ed Balls any day — a person who can indeed claim to be an economist yet who worked as Mr Brown's right hand man at the Treasury when our indebtedness went through the roof.