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Labour’s plans to end Britain’s long-term economic stagnation have been backed by a group of leading economists, including three Nobel Prize winners and a former deputy governor of the Bank of England.
In support of the Shadow Chancellor, Rachel ReevesThe 16 UK and international economists said change was “desperately needed” after policy mistakes and failures in the past 14 years since the Conservatives took power.
Reeves and Labor leader Keir Starmer have been accused by the Conservatives of not having a plan for the economy, but in a letter to the Guardianeconomists say Labor offers “credible alternative”.
Signatories to the letter include Nobel laureates Joe Stiglitz, Sir Christopher Pissarides and Sir Angus Deaton, as well as Sir Charles Bean, former deputy governor of the Bank of England.
The economy took center stage in the election campaign, with Rishi Sunak saying this last fall in the annual rate of inflation to the 2% target showed that the UK had ‘turned the corner’.“.
Labor said “Tory chaos” was responsible for weak growth and higher taxes – a view shared by the economists group.
“The UK has suffered a long period of economic stagnation over the past 14 years, with low growth in productivity, real wages and living standards,” the letter said.
“Not only is this record poor by historical standards, but the UK has underperformed its international peers. We are investing too little and too inefficiently – especially in skills, infrastructure and innovation.”
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While Starmer and Reeves have been criticized by some on the left for a cautious approach that has seen them largely mirror the Conservatives’ tax, spending and borrowing plans, the letter identifies four areas where it says Labor would make a difference.
A key problem, it says, is the number of policy mistakes, U-turns and leadership changes that have helped create “tremendous uncertainty that is sapping investment.” Since 2010, Britain has had five prime ministers and seven chancellors.
Economists say structural reforms are needed to improve public infrastructure and housing in the UK, particularly around the planning system which Labor has promised to speed up.
They also back the party’s commitment to improving trade relations with the EU after Brexit and say new urgency is needed to accelerate the transition to net zero and sustainable growth. Labor commits to decarbonisation of electricity supply by 2030 – which is considered an ambitious goal by energy experts.
“Change is desperately needed,” the letter said. “Contrary to what the government says, we believe that Labor provides a credible economic alternative across all these dimensions and that Keir Starmer and Rachel Reeves offer a combination of stability and an ambitious set of reforms to help grow the economy.”
Other signatories to the letter include Richard Layard, labor market expert and Labor colleague; Prof. Mariana Matsucato, Founding Director of the Institute for Innovation and Public Policy at University College London; and Prof David Blanchflower, former rate setter at the Bank of England’s Monetary Policy Committee.
Blanchflower told the Guardian it was welcome that Labor had won the endorsement of economists and doubted whether the Conservatives could produce a similar list supporting their economic strategy. “They’re going to struggle to find anyone with any influence,” he said. “How many Nobel Prize winners support conservatives?”
Blanchflower also said it was important that Reeves and Starmer had a firm plan if they were to win the July 4 election. “They’re going to be elected, so what are they going to do then? You can’t just go easy on the Tories,” he said.
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