you must boost investment to save the economy
Dozens of economists have warned that Labour and the Conservatives have failed to offer a “serious plan” to invest in the economy, which they said is “a recipe for further stagnation”.
In an open letter seen by i, 65 economic experts called on Sir Keir Starmer and Rishi Sunak to explain whether and how they would reverse austerity-era cuts to the capital investment made by the state and provide “fuel for growth”.
Both of the main parties are signed up to spending plans that imply a further squeeze to public investment from next year onwards.
Sir Keir and Rachel Reeves, who are expected to become Prime Minister and Chancellor within days if opinion polls are correct, have said they want the private sector to ramp up investment in Britain but refused to commit to more state spending other than on green infrastructure.
The group of economists, co-ordinated by a new campaign, Invest in Britain, warned: “The UK has consistently seen some of the lowest levels of public investment in the G7, and has been well below the OECD average for public investment.
“This lack of investment starves our economy of the fuel for growth and prosperity, whether that is infrastructure and innovation or a healthy and skilled population. Given our low levels of investment, it is no surprise the economy has performed so poorly in recent years, with slow recoveries from every major shock.”
They warned that “we are heading into this election without a serious plan to raise public investment”, which would be “a recipe for further stagnation”.
The International Monetary Fund, usually known for its caution on public spending, has called for greater state investment in sectors such as transport, health, communications and energy, arguing that more cash from the Treasury can end up encouraging private firms to invest too.
Tom Railton of Invest in Britain told i: “The UK economy is stuck in a doom loop of low investment, low growth, and falling living standards. The cause is clear: for decades we have not been investing enough in our collective future.
“There is a growing consensus among economists that serious action on public investment is imperative if we are going to reboot our economy, restore our public services, raise living standards, and tackle the unacceptable squeeze on household incomes. With just days to go until a decisive election, it’s time we got some serious answers on public investment, because further cuts simply aren’t credible.”
Among the economists who have signed the letter are Lord Skidelsky, Emeritus Professor of Political Economy, University of Warwick, Professor Paul Ekins OBE, of University College London, Professor Diego Sánchez-Ancochea, of the University of Oxford, and Professor Elisa Van Waeyenbergeof SOAS University of London.
At the last election, Boris Johnson promised to ramp up public investment, but after a short-lived uptick Jeremy Hunt has announced a five-year freeze to investment in cash terms – meaning it will head steadily downwards as a percentage of GDP.
Labour has scaled back its own infrastructure plans significantly, after concluding that a previous policy of investing £28bn a year in green technology was unaffordable, meaning that investment is still on course to fall as a share of the economy if the Opposition wins.
Election 2024
Rishi Sunak, Sir Keir Starmer and other party leaders are on the campaign trail, and i‘s election live blog is the go-to place for everything on the general election.
Reform has been under fire after Andrew Parker, a canvasser, was caught using a racial slur about Prime Minister Rishi Sunak. Nigel Farage has expressed ‘dismay’ at this.
Meanwhile, i has compiled the main parties’ pledges on key issues – read our breakdown of NHS, education, and defence. You can also read each party’s key manifesto pledges in our party breakdowns of the Tories, Green Party, Labour, Liberal Democrats and Reform UK.
