By Ian Dunt
Ed Balls has come out fighting in a last-minute bid to salvage his Labour leadership bid, warning that the coalition was at risk of triggering a 'double dip' recession.
Speaking at Bloomberg this morning, the shadow education secretary said George Osborne risked creating a "perfect storm" by removing liquidity from the economy just as global economic development showed signs of vulnerability.
"As the second storm looms everything he is doing is designed to suck money out of the economy and cut public investment, while his tax rises and benefit cuts will directly hit household finances at the worst possible time," Mr Balls said.
"It is the exact reverse of the policy which allowed Britain and the world to weather the first storm."
"By ripping away the foundations of growth and jobs in Britain David Cameron, Nick Clegg and George Osborne are not only leaving us badly exposed to the new economic storm that is coming, but are undermining the very goals of market stability and deficit reduction which their policies are designed to achieve," he said at the speech in Bloomberg
Mr Balls compared the coalition government's plans with the post-war Clement Atlee government, which created the welfare state despite the country having a massive deficit.
"Just think if Clement Attlee's government at the end of the Second World War had decided that the first priority was to reduce the debts built up during the Second World War - there would have been no money to fund the creation of the NHS, no money to rebuild the railways and housing destroyed in the Blitz, no money to fund the expansion of the welfare state," he said.
Mr Balls took issue with the tag of "deficit denier" used regularly by coalition government figures, saying it was their arguments which ran against the intellectual and historical record.
"For all George Osborne's talk of 'deficit deniers' -- where is the real denial in British politics at the moment?" he said.
"Against all the evidence, both contemporary and historical, he argues the private sector will somehow rush to fill the void left by government and consumer spending, and become the driver of jobs and growth. This is 'growth denial' on a grand scale."
Mr Balls has struggled to get past his past association with Gordon Brown during the leadership race, but is thought to be in third place, behind the Miliband brothers.