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The Observer fails to fact check its front page pro-Balls set piece

April 4th, 2011 Posted in Economics by

Ed Balls’ spin doctor, Alex Belardinelli, sent out an excited press release on Saturday revealing that the Observer was to “splash” on a predicted rise in household debts.

“These figures underline Ed Miliband’s warning about the cost of living crisis facing families in the squeezed middle,” it said.

Of course, this wasn’t the Observer’s splash, but Balls’ man was right that his story would appear on the Observer’s front page the next day.

Unfortunately, the second paragraph of this story got its facts wrong.

“The Office for Budget Responsibility has raised its prediction of total household debt in 2015 by a staggering £303bn since late last year,” it says.

Not true. In the OBR’s forecasts “late last year” (ie. November), debts were forecast at a revised £2,113bn. The latest forecasts are for £2,126bn.

This is an increase of £13bn, or 0.6%.

It is not an increase of £303bn, which would be a 14.3% jump.

A big hat-tip to David Smith [@dsmitheconomics], economics editor at the Sunday Times, for pointing out the error.

What the Observer meant to say, Smith calculates, was that the figure has increased by £303bn since last summer.

At that time, last summer, inflation was at 3.1% (CPI), while now it’s at 4.4%. Spiralling inflation might just have something to do with the rise in the figure.

The Observer article is packed with quotations from and citations of Ed Balls (funny, that), Labour MP Chuka Umunna, the Labour-leaning IPPR, and the socialist-Keynesian’s favourite economist, Paul Krugman.

It is bylined, incidentally, by the Observer’s political editor and policy editor – not the economics team.

The OBR’s March report, which the story is based on, also revealed that government sector debt net will break through 70 per cent of British GDP by 2013-14.

The UK’s net debt (note to Balls – this is different to the “deficit”) hit £875.8bn in February, while government spending has increased since Osborne arrived at Number 11.

Central government spending alone is up over £30bn compared to the same time in Labour’s last fiscal year.

And yet it’s “cuts” that are responsible for our economic plight? The Observer and its pals needs to get its facts right.

4 Responses to “The Observer fails to fact check its front page pro-Balls set piece”

  1. Grammar Hound Says:

    Ungramatical use of the English appears too frequently in work by people working in communication sectors such as newspapers and blogs. If one wishes to communicate, it is so much better to do so in crisp and elegant language. Unfortunately this skill eludes me.

    The most grating example here is “bylined”: it would be less grating if it read ” the article was under the byline of…”

    Oh for the Queen’s English!

  2. Coopercap Says:

    I too hate the conversion of nouns to verbs so often appearing in the media. However I am not in such a rush to judgment that I don’t check my spelling.

    At least Grammar Hound admits the skill eludes him/her after saying “work by people working”!

  3. impedant Says:

    That Balls, of all people, would make this argument, is shameless.

    Household debt/income peaked went from 1.0 in 1997 to 1.73 in 2007.

    ONS series NNPP / RPHQ, graphed:

    The OBR data show the ratio dipping to 1.6 then rising up to 1.75 over the next five years. So on the coalition’s watch, it would go from 1.57 (2010) to 1.75 (2015). This compares badly to Labour’s record, really?

    This argument is doubly stupid because in aggregate, UK households have net positive financial assets – their assets are worth more than their liabilities. The OBR don’t show their extrapolation of assets but I would presume that is predicted to remain the case.

  4. Major Plonquer Says:

    If the British people detest bankers so much it’s seems strange that they keep going back and asking for more…..