David Cameron did rather well at the EU summit. He had a rampant euro-sceptic mob of Tory MPs at his back and a spendthrift European commission at his front, egged on by the majority of EU members, who are net beneficiaries of the financial re-distribution mechanism at the heart of the EU. In the overall scheme of things the issues are political and driven by domestic politics of the member countries, rather than economic and driven by euro politics. That is because the whole budget comprises about 1% of combined EU GDP. In the context of the general financial crisis and the paralysis at the centre of the euro currency, this is very small beer.
With the domestic voters of individual net contributor states, it is large, very large beer because all of them are having to adjust their lives to cope with cuts and austerity. To learn that a group of bureaucrats and poorer EU members think that an increase in spending is not only possible, but reasonable, even desirable, causes consternation, leading to very real anger. Cameron has coped with the pressures well and has emerged from the summit in much better condition than when he used his famous veto in the euro crisis. He has also pleased all wings of the Tory party, not just the Right. Faced with this, Labour is trying to pick holes. Ed Balls says the Prime minister is weak and marginalised. Oh? So if Ed Milliband were PM and turned up at the summit and said he wanted a cut, because that is what Labour voted for in the Commons, he would have been greeted with acclamation and at once the budget would have been slashed? Come on!
Labour has a problem with all of this. It presided over a period when the economy was all but wrecked by a combination of house price inflation, excessive borrowing, government spending, budget deficits and trade gaps. It also organised what it called light touch regulation of the City, in which spivs subsequently ran riot. No other government in modern history has found itself faced with the imminent collapse of the banking system. Although opinion polls suggest a comfortable Labour win if there were a general election tomorrow, there is not going to be one and when there is it may just be that the economy looks to be on the road to recovery.
As Ed Balls should be able to see from the Republican failure in the US, coming up with the same financial policy which created the crisis in the first place, does not convince enough electors to bring victory. Labour has got to come up with an innovative and informed set of financial policies that do not rely on borrowing more, otherwise Ed Milliband, like Kinnock before him, will watch certain victory turn into humiliating defeat.
It is time to find a new Shadow Chancellor.