Economists warn against cuts to public investment in economy
- Eight prominent economists have warned against further cuts to public investment, stating that such actions would undermine the foundations of the UK economy.
- They argue that the current debt rules create a bias against investment, necessitating changes to fiscal policies to promote long-term economic sustainability.
- The economists emphasize that without increased public investment, the government's plans for a 'decade of national renewal' cannot be realized.
In a recent letter published in the Financial Times, eight influential economists have expressed their concerns regarding proposed cuts to public investment in the UK. They highlight that these cuts could severely damage the economy's foundations and hinder the government's ambitious plans for a 'decade of national renewal.' The economists include notable figures such as Lord Gus O'Donnell and Professor Mariana Mazzucato, who collectively stress the importance of maintaining and increasing public investment for long-term economic health. The economists point out that the current debt rules imposed by the UK government create an inherent bias against investment. These rules require ministers to demonstrate a reduction in debt as a share of the economy over a five-year period, which they argue is counterproductive. They advocate for a more responsible fiscal approach that recognizes the significant long-term benefits of increased public investment. As the Chancellor prepares for the upcoming budget, which is expected to include tax hikes and spending cuts to address a £22 billion overspend, the economists warn that such measures could repeat past mistakes. They emphasize that without a strategic focus on public investment, the UK risks undermining its long-term fiscal sustainability. The economists call for a shift in fiscal policy to support a pro-investment framework, arguing that this is essential for achieving sustainable economic growth and stability in the future.