British opposition is warning that the government’s insistence on its current deficit reduction plans will “permanently weaken” the economy.
Shadow Chancellor Ed Balls told The Independent on Sunday
that the government is leading a “sit on your hands strategy” amid the worsening double-dip recession, pinning its hopes to the Olympics boost to save the economy.
Balls said such an approach is “dangerous” and will force the country to pay a “long-term price” for the government’s mistake.
"As the IMF said last week, the long-term impact on the underlying strength of the British economy will be more young people unemployed and businesses investing in other parts of world. All of those things add up to an economy which ends up permanently weaker, not just temporarily weaker,” Balls said.
The British Office for National Statistics announced earlier this week that the GDP has dropped by 0.7 percent in the second quarter of 2012, marking the economy’s entrance into its longest recession since 1955.
Balls’ top aide, shadow chief secretary to the Treasury Rachel Reeves directly blamed the “deepening double-dip recession” on the government’s economic policy, writing in a Twitter post “GDP down 0.7% in Q2 - disastrous verdict on [Chancellor] George Osborne's failed plan.”