Labour’s plans to end Britain’s long term economic stagnation are supported by a group of economists including three Nobel Prize winners and a former Bank of England vice governor.
The 16 UK-based and international economists, in a move to support the shadow chancellor Rachel Reeves said that change was “desperately required” following the policy failures and mistakes of the last 14 years, since the Conservatives came to power.
Reeves, and Labour’s leader Keir starmer, were accused by Conservatives as having no economic plan, but economists claim that Labour is a “credible” alternative.
Signatories of the letter include Nobel Prize winners Joe Stiglitz and Sir Christopher Pissarides, as well Sir Angus Deaton. Also included is Sir Charles Bean, a retired deputy governor of Bank of England.
Rishi Sunak said that the most recent fall of the annual inflation rate towards its 2% target demonstrated that the UK has “turned a new corner”.
Labour said that “Tory Chaos” was responsible for the weak growth and high taxes. This view is also shared by economists.
The letter states that “Britain suffered from a long period economic stagnation in the last 14 year, with low growth of productivity, real wages, and living standards.”
“Not only does this record look bad by historical standards but also, the UK has underperformed in comparison to its international counterparts.” We invest too little, and inefficiently. This is especially true in the areas of skills, innovation and infrastructure.
The letter says that while Starmer and Reeves are criticised for their cautious approach, which has seen them closely mirroring Conservative tax, borrowing and spending plans, Labour could make a significant difference in four key areas.
The report cites the policy errors, U-turns, and leadership changes as a key issue, which has contributed to “huge uncertainty that saps investment”. Since 2010, Britain’s had five prime ministers, and seven chancellors.
According to economists, structural reforms will be needed to improve housing and public infrastructure in the UK, particularly around the planning system. Labour has promised to accelerate this process. Labour is committed to Contrary to the government’s claims, we think that Labour offers a credible alternative in all of these dimensions. Keir Reeves also provides stability, while a set of ambitious reforms will help to grow the economy.
Richard Layard is a Labour peer and labour market expert. Prof Mariana Mazzucato is the founding director of University College London’s Institute for Innovation and Public Policy. Prof David Blanchflower was a former rate-setter on the Bank of England monetary policy committee.
Blanchflower said it was good that Labour has the support of economists, but doubted if the Conservatives would be able to put together a list similar to their economic strategy. He said that the Conservatives would have a hard time finding anyone with any influence. How many Nobel Prize winners are Conservatives?
Blanchflower said that it was also important for Reeves to have a plan in place if they won the elections on 4 July. What will they do if they are elected? “You can’t be Tory-lite”, said he.
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