The prime minister found the Indonesian president has more in common with Ed Balls when it comes to economic policy
Ed Balls appears to have signed up a rather influential supporter to his budget deficit reduction plan. The president of Indonesia, Susilo Bambang Yudhoyono, has delivered a mini-lecture on the importance of Keynesian demand management, at a joint press conference in Jakarta with David Cameron.
Asked whether there were any lessons for Britain from Indonesia's booming economy, the president said: "I'm not in a position to suggest to other countries what should be done to overcome challenges in their own economies. Every country no doubt will discover their own way to resolve economic challenges."
But then the former army officer, now known as SBY, outlined how Indonesia had introduced a Keynesian fiscal stimulus after the Asian financial crash during 1998.
Balls says Cameron has harmed Britain's economic recovery by withdrawing Keynesian measures to raise public spending and so boost the economy while activity in the private sector is slow. The shadow chancellor accuses the coalition of embarking on a deficit reduction plan that goes "too far and too fast".
SBY said: "In 1998 our economy was devastated. It collapsed. We learned a lot. We had major reforms. We did many things. So 10 years later, when the economy was impacted, we were united – the government, private sector, regions. We also developed policies – fiscal policies, monetary policies – that protected us.
"We should prevent [companies] conducting layoffs. We should safeguard unemployment levels. We know the community was impacted by this. We provided social assistance, we provided stimulus so that [people] can buy purchases.
"It seemed to work for Indonesia. It may not work in other countries. What is important is we have to prevent layoffs, we must ensure people can buy, we must ensure industries can produce, and we must make the government be able to make the right fiscal and monetary policy responses."
Chris Leslie, Labour Treasury spokesman, said: "The prime minister should heed the advice of President Yudhoyono. He is right that the lessons of previous crises are that when your economy has suffered a shock you need a real plan for jobs and growth, and that hitting jobs and family finances will hold back recovery."