Economists Urge UK Chancellor to Boost Investment

A group of prominent economists has urged Chancellor Rachel Reeves to avoid cuts to public investment in her upcoming Budget, warning that such reductions could undermine the UK's economic foundations and hinder long-term growth. In a letter to the Financial Times, they criticized the fiscal plans inherited from the previous government, which would reduce investment as a share of GDP, labeling this an 'inbuilt bias' against investment. The signatories, including Lord Gus O'Donnell and Mariana Mazzucato, emphasized that history shows investment cuts, made in the name of fiscal prudence, have led to stagnation and greater social and environmental challenges. They advocate for a pro-investment fiscal framework to support a 'decade of national renewal'. Although Labour has pledged to increase investment by £4.7 billion annually, this will not prevent a decline in public investment as a share of GDP. The economists argue that substantial public investment is essential for the UK’s fiscal sustainability and economic resilience.