Leader: Balls out of line with tax cut call

A CALL from the shadow chancellor Ed Balls urging a cut in VAT to "jump-start" the economy brings a bizarre twist to traditional party positions: the Conservatives defending tax rises and the Labour opposition in favour of tax cuts.

Mr Balls is now aligned with critics on the Conservative Right concerned about the impact of high tax on motivation and incentives, while Labour is concerned at signs of slowdown. Yesterday brought news of a 1.4 per cent fall in retail sales last month, reversing the 1.1 per cent royal wedding "spike" in April.

Worrying though recent downbeat business surveys have been, not everything is as bleak as Mr Balls would like to paint. The UK continues to enjoy falls in unemployment while in Scotland an unemployment decline of 10,000 during the February-April period marked the seventh consecutive reported fall. For good measure, the figures also showed a 2,000 rise in numbers employed in the public sector to 618,000 over the previous quarter and up by 23,000 since the financial crisis struck. Austerity in the public sector? Not yet awhile.

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And according to the Lloyds TSB Scotland Business Monitor out today, the Scottish economy continues to recover. In the quarter to end May a net balance of firms reported increased turnover, while the balance in the production sector also swung into positive territory. Tough though the VAT hike is proving for households, it is vital progress is made in cutting the budget deficit - and saving that Triple A credit rating.