You did not define what this inch of space was composed of.
If this inch of space was air, it would be physically different
than liquid water being in that space. Why is it physically different? Because water is not compressible and maybe not decompressible either. In order for a vacuum to originate in that space, something has to "give way". Water does not give way. Air does.
If this inch of space was pure vacuum, I am afraid you have done something no man has done before, and I would like to ask you how you created that pure vacuum since they do not exist.
If you argue, that, well, no it is not a pure vacuum.. it is... composed of some water vapor.. then.. how did you first break down that water into vapor I will ask. If you argue that well, the space got full of a tiny bit of air, then I will just argue back that I said it was WATER not air.
Air can be changed easily (compressed and decompressed) in size. Water cannot. Air allows practical partial imperfect vacuums to exist. Water since it is not decompressible/compressible in liquid form, does not AFAIK, allow a vacuum to spontaneously exist out of no where. It seems that practical imperfect vacuums (ones we can actually create) need some other gas molecules to exist. Water is not a gas molecule, it is liquid.
If one has ever held a science syringe with thumb on end and pulled the syringe handle, one would know that it is very easy to change air volume in the syringe. However if one fills the plastic syringe with pure water and no air, the syringe gets locked when you try to pull it with thumb in place. Then, as you pull, the syringe busts and cracks or the handle rips into two pieces if you are strong enough. Often the syringe plastic will deform and collapse, imploding.
So, what component is the most likely to "give way" in the system I described? Probably the air inside the balloon. Instead of the air inside the balloon being compressed when under hydrostatic pressure, it will just.. I don't know, stretch out and have lower pressure. Still mind boggling me at this point though.