View more on these topics

Economists urge delay on spending cuts

Sixty economists have written to the Financial Times in two open letters warning of the danger of further spending cuts coming too soon.

The letters from Professor Lord Layard, Lord Skidelsky and others including David Blanchflower, argue against the earlier conflicting open letter to the Sunday Times on February 14, calling for a rapid reduction of the budget deficit.

Professor Layard and co-signatories’ letter warns that “while unemployment is still high, it would be dangerous to reduce the Government’s contribution to aggregate demand beyond the cuts already planned for 2010-11”, amounting to 1 per cent of gross domestic product.

The letter says: “With people’s livelihoods at stake, the Government should avoid reckless actions.”

It adds that history is littered with examples of governments withdrawing stimuli too early, such as in the US in 1937 and Japan in 1997.

In a separate letter, Lord Skidelsky and others write that the economists behind the February 14 letter “fail to point out that the current deficit reflects the deepest and longest global recession since the war”.

The letter says that “extraordinary public sector fiscal and financial support is needed to prevent the UK economy from falling off a cliff”.

It says that by seeking to reassure the financial markets by calling for a rapid reduction in the deficit, the February 14 economists are pandering to the views of the very financial markets whose mistakes precipitated the crisis in the first place.


Mott’s fund is a nifty buy

Bill Mott’s PSigma income fund is including a focus on a small number of firms which can thrive amid a continuing poor UK outlook


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. It is debatable whether we will now be able to tackle the mounting debt through taxation because increases in tax are negated by a lower tax take resulting from lower spending and additional redundancies. The longer we delay spending cuts the worse the situation becomes. We need to face reality and take action immediately.

    The idea that we should keep spending and further increase debt that is already impossible to repay in our lifetime is like playing with fire

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm