Labour’s plans for ending Britain’s long-term economic stagnation have been backed by a group of leading economists, including three Nobel prize winners and a former Bank of England deputy governor.
In a boost to the shadow chancellor, Rachel Reeves, the 16 UK and internationally based economists said change was “desperately needed” after the policy mistakes and failures of the past 14 years since the Conservatives took power.
Reeves and the Labour leader, Keir Starmer, have been accused by the Conservatives of having no plan for the economy but, in a letter to the Guardian, the economists say Labour offers a “credible alternative”.
The letter’s signatories include the Nobel prize winners Joe Stiglitz, Sir Christopher Pissarides and Sir Angus Deaton, as well as Sir Charles Bean, a former deputy governor of the Bank of England.
The economy has featured heavily in the election campaign, with Rishi Sunak saying the latest fall in the annual inflation rate to its 2% target showed that the UK had “turned a corner”.
Labour has said “Tory chaos” has been responsible for weak growth and higher taxes – a view that is shared by the group of economists.
“Britain has suffered a long period of economic stagnation over the last 14 years, with low growth in productivity, real wages and living standards,” the letter says.
“Not only is this record poor by historical standards, but the UK has also underperformed compared to its international peers. We invest too little and too inefficiently – especially in skills, infrastructure and innovation.”
While Starmer and Reeves have been criticised by some on the left for a cautious approach that has seen them largely mirror Conservative tax, spending and borrowing plans, the letter identifies four areas where it says Labour would make a difference.
A key problem, it says, has been the number of policy mistakes, U-turns and changes of leadership, which have helped create “huge investment-sapping uncertainty”. Since 2010, Britain has had five prime ministers and seven chancellors.
The economists say structural reforms are needed to improve the UK’s public infrastructure and housing, especially around the planning system, which Labour has pledged to speed up.
They also support the party’s commitment to improving the post-Brexit trade relationship with the EU and say fresh urgency is needed to speed up the transition to net zero and sustainable growth. Labour is committed to decarbonising the electricity supply by 2030 – which is considered to be an ambitious target by energy experts.
“Change is desperately needed”, the letter says. “Contrary to what the government has been saying, we believe that Labour provides a credible economic alternative across all these dimensions, and that Keir Starmer and Rachel Reeves offer a combination of stability and an ambitious set of reforms to help grow the economy.”
Among the other signatories to the letter are Richard Layard, the labour market expert and Labour peer; Prof Mariana Mazzucato, the founding director of the Institute for Innovation and Public Policy at University College London; and Prof David Blanchflower, a former interest-rate setter on the Bank of England’s ’s monetary policy committee.
Blanchflower told the Guardian it was welcome that Labour had the endorsement of economists and doubted whether the Conservatives could put together a similar list backing their economic strategy. “They would struggle to find anybody with any clout”, he said. “How many Nobel prize winners support the Conservatives?”
Blanchflower also said it was important Reeves and Starmer had a firm plan if they win the election on 4 July. “They are going to be elected, so what are they going to do then? You can’t just be Tory-lite”, he said.
