I just caught up with the fight in the Commons earlier. Balls had a brutal line against Osborne, bluntly summarising the absurdity of the situation:
He has gone in a weekend from saying we must stick to his plan to avoid a downgrade, to saying the downgrade is now the reason we must stick to his plan.
Jonathan Portes has been linking on Twitter to an old post of his which shows this is nothing new. Every time there is bad economic news which Osborne said his policies would help us avoid, he twists it and takes it as evidence that his policies are even more necessary now than they were before. Portes quotes Popper and compares this to Marxism in terms of pure ideology, detached from any desire to be checked by empirical reality:
[It] is no longer a science; for it broke the methodological rule that we must accept falsification, and it immunized itself against the most blatant refutations of its predictions. Ever since then, it can be described only as nonscience—as a metaphysical dream, if you like, married to a cruel reality.
John Van Reenen joins in:
[T]he loss of the rating is like the canary in the mineshaft – it reflects the real problem that the UK economy has shrunk by over 3% since 2008. This is a worse growth performance than the Great Depression with lacklustre growth forecast ahead on current policies. The government cannot duck its responsibility for this awful performance as the speed of austerity has been too swift. There would have been benefits from a more sensible profile were deficits paid back when the economy’s recovery was more secure. Even the IMF has recognised that austerity in a recession is counterproductive when interest rates are near zero and other countries are also fiscally contracting.