Balls’ new friend: Shadow chancellor looks stateside for economy answers

By Phoebe Cooke

Ed Balls is to team up with former US treasury secretary Larry Summers in a bid to come up with transatlantic answers to Britain and America's economic woes.

The shadow chancellor announced a 'transatlantic commission' in a newspaper article in which he accused the Conservative party of "woefully misplaced hubris" about the state of the economy.

Balls' association with the former US treasury supremo began more than two decades ago when Balls studied under Bill Clinton's former fiscal man at Harvard.

After warnings from the Labour ranks that economic recovery is only benefiting the higher income groups, Balls will travel to Washington this week for meetings Ben Bernanke, the chairman of the Federal Reserve, and Gene Sperling, the director of Barack Obama's national economic council who also served in the Clinton administration.

In an article for the Guardian, Balls recalls campervanning through the US and contrasts American anxieties about the economy with the "misplaced complacency" of the Conservative party.

"This week former US treasury secretary Larry Summers and I will launch a transatlantic commission on inclusive prosperity to investigate what reforms our countries need to generate more high-wage jobs for the future," he wrote.

"Instead of complacent claims that everything is going to plan, Osborne should this week recognise that for ordinary families life is still getting harder.

"And with risks and uncertainties in the global economy ahead, he should finally act to secure the recovery he squandered three years ago and ensure it benefits the whole country."

The shadow chancellor's revelations come after David Cameron said he thought the slight upward economic trend meant it might be possible for  families to receive modest tax cuts to "give people back some of their hard-earned money."

Balls pointed out this sentiment is in direct contrast to chancellor George Osborne's recent comment that any reduction in tax at the moment was a "very silly" idea.

With a nod to Britain's recent Ashes successes, Balls undermined the Conservatives' attempt to say that the current trend in growth makes up for the past few years of financial difficulties.

"Conservative ministers will claim this modest return to growth is proof that Osborne's plan has worked after all," he added.

"This is a little like Australia's cricket team scraping a draw in the next Test and proclaiming their tour a success."

Balls curried favour with Democrat economists after his landmark Bloomberg speech in August 2010 during the Labour leadership contest, in which he warned that Osborne's deficit reduction plan was "the equivalent of ripping out the foundations of the house just as the hurricane is about to hit".