Treasury won’t back down on cuts
In a letter to the Observer newspaper spearheaded by Tim Besley, a former Bank of England monetary policy committee, he and 46 other economists demanded changes to the Coalition’s economic policy, claiming the UK’s finances are too unstable to withstand the spending cuts.
Besley said he was ‘disappointed with growth’ but declared the Chancellor must stick to his guns.
The Treasury and senior Cabinet ministers said there was no need for a change of course and put the blame squarely on Labour’s shoulders for leaving the country with a record deficit.
The letter warned: “Recent economic figures have shown the Government urgently needs to adopt a plan B for the economy. The Government’s strategy is likely to result in a lot more pain and a lot less gain.”
But Treasury Chief Secretary Danny Alexander dismissed the letter by saying: ‘We’re not going to help the recovery by abandoning the rescue mission.
“These economists are people who said something similar, by and large, a year ago. We inherited a very difficult position – a huge budget deficit, there are a huge range of problems in the world economy at the moment, but we have a mission.”
Labour seized on the claims in the letter. Shadow Chancellor Ed Balls insisted: ‘Confidence is down and we are now seeing more evidence the economy is stalling.’