Leading economists have warned the Chancellor that holding back public investment will damage Britain’s growth.
In a letter to the Financial Times, the group of eight senior figures urged Rachel Reeves to reverse plans inherited from the Tory government.
They argued that reducing investment as a share of gross domestic product (GDP) would backfire.
Public investment: In a letter to the Financial Times, a group of eight leading economists urged Rachel Reeves to reverse plans inherited from the Tory government
Labour has pledged to spend an extra £4.7billion a year investing in energy and the green transition but that would still leave investment as a share of GDP falling.
Signatories to the FT letter include former cabinet secretary Lord O’Donnell, who served under Tony Blair, Gordon Brown and David Cameron.
Former commercial secretary to the Treasury Lord O’Neill and University College London professor Mariana Mazzucato – whose signature idea of ‘mission driven’ government inspired Sir Keir Starmer – also signed the letter.
‘The Government has inherited spending plans that imply substantial real-terms cuts in public investment over the current parliament,’ the letter said.
‘We do not see how the planned “decade of national renewal” can take place if these cuts are delivered.’
The letter added that ‘low investment leads to both a weaker economy and greater social and environmental problems’.
The Government has already faced a fierce backlash for cuts including plans to axe winter fuel payments to 10m pensioners.
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