Support 100 years of independent journalism.

  1. Politics
5 June 2011

Economists ask: where is Osborne’s Plan B?

Signatories of a letter to the Observer include several academics who backed the scheme las

By Samira Shackle

A group of leading economists has called for George Osborne to change course on his deficit reduction strategy, saying that it is “stalling”.

A letter to the Observer signed by 47 academics and economists said:

Recent economic figures have shown that the government urgently needs to adopt a Plan B for the economy. As economists and academics, we know the breakneck deficit-reduction plan, based largely on spending cuts, is self-defeating even on its own terms. It will probably not manage to close the deficit in the planned time frame and the government’s strategy is likely to result in a lot more pain and a lot less gain.

We believe a more effective strategy for sustainable growth would be achieved:

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s global affairs newsletter, every Monday and Friday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy

– through a green new deal and a focus on targeted industrial policy.

– by clamping down on tax avoidance and evasion, as well as by raising taxes on those best able to pay

– through real financial reform, job creation, “unsqueezing” the incomes of the majority, the empowerment of workers and a better work-life balance.

These are the foundation of a real alternative and it is time the government adopted it.

Damagingly, several people have signed who were signatories of a letter to the Sunday Times last year which supported the Conservatives’ approach. This indicates worry across the board about the slow rate of growth. Britain’s economy grew by a sluggish 0.5 per cent in the first three months of this year but inflation rose by more than expected to 4.5 per cent.

The former chief economist at the Cabinet Office Jonathan Portes has also called for a change of course. Now director of the National Institute of Economic and Social Research, he said: “You do not gain credibility by sticking to a strategy that is not working.” Sadly, Osborne does not appear to see it that way.