This letter was published in The Times, 3 March 2021
and was signed by 49 leading economists including many PEF Council members
Sir,
According to leaks, the Treasury believes it is vital that the UK keep public debt below 100 per cent of GDP, so making short-term tax rises necessary. This is economically illiterate. As the OECD and IMF have said, the imperative is to get the UK out of the Covid recession. This requires a fiscal stimulus, not a retrenchment. Extra public spending is needed to create business demand and jobs for those made unemployed.
There is nothing magical about the figure of 100 per cent of GDP. Whether debt is sustainable depends on how the economy is growing and the rate of interest. Today the government can borrow for 30 years at a real interest rate of close to zero. Because of this, its debt interest payments are lower now than they were ten years ago. The Bank of England has already bought 80 per cent of government debt over the past year and can continue to do so, thereby keeping interest rates low.
As the OECD has now accepted, austerity policy after the 2008 financial crash retarded the UK’s recovery and slowed actual deficit reduction. It would be a tragedy if wrongheaded economics was used to justify the same mistake now.
Yours
David Blanchflower, Professor of Economics, Dartmouth College and University of Glasgow, and former member of the Bank of England Monetary Policy Committee
Mark Blyth, William R. Rhodes ’57 Professor of International Economics, Brown University
Victoria Chick, Emeritus Professor of Economics, University College London
Jennifer Churchill, Senior Lecturer in Economics, Kingston University
Christine Cooper, Professor of Accounting, University of Edinburgh
Andrew Cumbers, Professor of Regional Political Economy, University of Glasgow
Mike Danson, Professor Emeritus, Heriot-Watt University
Jerome De Henau, Senior Lecturer in Economics, The Open University
Panicos Demetriades, Professor of Financial Economics, University of Leicester
Danny Dorling, Halford Mackinder Professor of Geography, University of Oxford
Sheila Dow, Emeritus Professor of Economics, University of Stirling
Gary Dymski, Professor of Applied Economics, University of Leeds
Diane Elson, Emeritus Professor, University of Essex, and Chair, Commission on a Gender Equal Economy
Felix Fitzroy, Emeritus Professor of Economics, University of St Andrews
Giuseppe Fontana, Professor of Monetary Economics, University of Leeds
Daniela Gabor, Professor of Economics and Macro-Finance, UWE Bristol
Stephany Griffith-Jones, Emeritus Professorial Fellow, Sussex University and Financial Markets Program Director, IPD, Columbia University
Barbara Harriss-White, Emeritus Professor and Fellow, Wolfson College, Oxford University
Philip Haynes, Professor of Public Policy, University of Brighton
Susan Himmelweit, Emeritus Professor of Economics, The Open University Will Hutton, Research Associate, Centre for Economic Performance, LSE
Michael Jacobs, Professor of Political Economy, Sheffield Political Economy Research Institute, University of Sheffield
Richard Jolly, Professor and Honorary Associate, IDS, University of Sussex
Calvin Jones, Professor of Economics, Cardiff Business School, Cardiff University
Sue Konzelmann, Reader in Management, Birkbeck, University of London
Neil Lancastle, Senior Lecturer, De Montfort University
Lorena Lombardozzi, Lecturer in Economics, The Open University
Robert McMaster, Professor of Political Economy, University of Glasgow
Jo Michell, Associate Professor of Economics, UWE Bristol
Johnna Montgomerie, Professor of International Political Economy, King’s College London
Simon Mohun, Emeritus Professor of Political Economy, Queen Mary University of London
Henrietta Moore, Founder and Director, UCL Institute for Global Prosperity
Susan Newman, Professor and Head of Economics, The Open University
Ozlem Onaran, Professor of Economics, University of Greenwich
Jonathan Perraton, Senior Lecturer in Economics, University of Sheffield
Thomas Piketty, Professor of Economics, Paris School of Economics
Andy Ross FAcSS, Visiting Professor of Economics, Loughborough University and Birkbeck College, University of London
Josh Ryan-Collins, Head of Finance and Macroeconomics, UCL Institute for Innovation and Public Purpose
Malcolm Sawyer, Emeritus Professor of Economics, University of Leeds
Marianne Sensier, Research Fellow, University of Manchester
Lord Prem Sikka, Emeritus Professor of Accounting, University of Essex
David Soskice FBA, Professor of Political Science and Economics, LSE
Frances Stewart, Emeritus Professor of Development Economics, University of Oxford
Tony Thirlwall, Professor of Applied Economics, University of Kent
Jan Toporowski, Professor of Economics and Finance, SOAS University of London
Sophie van Huellen, Lecturer in Economics, SOAS University of London
Roberto Veneziani, Professor of Economics, School of Economics and Finance, Queen Mary University of London
David Vines, Emeritus Professor of Economics, Oxford University
Geoff Whittam, Professor, Glasgow Caledonian University Business School
Simon Wren-Lewis, Emeritus Professor of Economics, University of Oxford