Delayed public investment will hurt Britain’s growth, leading economists tell Reeves

Leading economists have warned the Chancellor of the Exchequer that curbing public investment will hurt 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 Conservative government.

They argued that reducing investment as a percentage of gross domestic product (GDP) would be counterproductive.

Labour has pledged to spend an extra £4.7bn a year on energy investment 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 ​​a “mission-driven” government inspired Sir Keir Starmer) also signed the letter.

“The Government has inherited spending plans that imply substantial cuts in real terms in public investment during the current parliament,” the letter states.

“We do not see how the planned ‘decade of national renewal’ can be achieved if these cuts are implemented.”

The letter added that “low investment leads to a weaker economy and greater social and environmental problems.”

The government has already faced a fierce backlash over the cuts, including plans to scrap winter fuel payments for 10 million pensioners.