Here’s your Plan B, Mr Osborne

Nine of the world's leading economists offer an alternative to the coalition's austerity measures.

By New Statesman Published 18 October 2011

Nine of the world's leading economists offer an alternative to the coalition's austerity measures.

The coalition claims there is no alternative to austerity. Below, nine leading economists, including a Nobel Prizewinner and one of the Chancellor's own advisers, say that's wrong -- and offer a different path. You can read their open letters to the Chancellor here:

Cut VAT back to 17.5 per cent
Christopher Pissarides

Agree financial transaction tax
Jeffrey Sachs

Reduce NI contributions
David Blanchflower

Print money for the public
Sushil Wadhwani

Start a national investment bank
Robert Skidelsky

Lift the cap on immigration
Jonathan Portes

Lend directly to small businesses
George Magnus

Launch a green new deal
Ann Pettifor

Set up a recovery fund
Christopher Allsopp

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Tags: Plan B

13 comments

Thu, 2012-04-26 19:13 — matthew fox (not verified)

Inastew, the government borrowed £18.2 Billion for Mar 12, more then Mar 11.

I see income tax revenues declined by 3%, vat receipts by 1% and corporation tax revenues.

Do you remember all the talk about the government undershooting it's twice revised borrowing forecasts?

Thu, 2011-10-20 07:50 — Luddite (not verified)

Just listening to Ed Balls shows the left has no alternative to responsible government. David Cameron. Ed Milliband. Nick Clegg, are all of the liberal political-left, not one of them are courageous enough to make the right but difficult decisions.

Wed, 2011-10-19 12:57 — Anton Jury (not verified)

How can anyone expect the economically illerate George Osborne to understand a Plan B when he does not understand his very own Plan A.

Fri, 2011-10-21 00:39 — weiss

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Wed, 2011-10-19 14:46 — Indu Pendent (not verified)

Do we really need Labour's Plan B --- the plan of Gordon and Ed Balls. The same plan Alistair says is not credible. Its the plan to borrow £250Bn more than the coalition.

Its the Labour fiscal shuffle: Borrow borrow spend spend spin vote power elite. Lie lie insult boggots manipulate voters power elite.

The coalition should stick to Plan A because its working: last year inflation of 5.2% vs wage rates of 1.8% means UK labor has become 3.4% more competitive. So long as this continues, a point will come when exports will start to be competitive and we will sell more.

To maintain inflation at around 5% we need to increase the amount of QE being done. It is eroding sterling allowing the pound to fall and in time will generate export jobs.

Its the part of Plan A people dont want to talk about.

Tue, 2011-10-18 15:00 — ang (not verified)

George Osborne; See nothing, hear nothing, say nothing.

Tue, 2011-10-18 16:18 — Graham (not verified)

We need national debt reduced, we need the deficit cut, we need growth again.

The tories are not helping in these three categories

Wed, 2011-10-19 17:34 — Pi**sed off (not verified)

If he works for this Government then he works for the Banksters and there will be NO OTHER PLAN MADE, it is that simple. They cannot earn money if we are not in debt. We can expect nothing other than extreme robbery and utter thievery whenever these parasites are involved. Bring the banks and the financiers to their knees is the only way for society to benefit

Wed, 2011-10-19 17:37 — Graham (not verified)

@Indu - falling pound won't create export jobs - we are net importers despite the recent slight trade surplus last quarter.

Also our national debt is increasing and will continue to if the pound falls.

The tories always leave Labour with a high National debt in proportion to GDP.

Fri, 2011-10-21 15:22 — Indu Pendent (not verified)

Graham

" falling pound won't create export jobs - we are net importers despite the recent slight trade surplus last quarter."

Thats not what David Blanchflower says. He says QE drops the exchange rate and results in stimulus from more export sales. Its in some of his NS posts.

The whole debate about keeping sterling out of the Euro is that when we are in a recession we can let sterling drop to grow the economy. Just like China does to their currency.

The converse is that a low pound means more expensive imports so people buy fewer of them. That stops money leaking out of the economy which is a stimulus and increases the fiscal multiplier (you'll have to google it). It puts retailers of imports under pressure who make disproporlion complaining noises .

Lower sterling also creates inflation (import prices go up). Normally this is damaging because it stimulates wage inflation. But at the moment inflation is a major asset to the UK -- wages are subdued and inflation is eroding the relative value of people making the Brits more competitive.