William Hague, the Foreign Secretary, said deficit reduction was “vital” to maintain confidence in the economy, adding that the government’s approach had the backing of the world’s major international economic organizations, reported the Telegraph.
In a letter to a Sunday newspaper, the academics described the Coalition’s “breakneck deficit-reduction plan” as “self defeating” and said the government urgently needed a “Plan B” as official figures were showing sluggish growth.
Following the publication of the letter, several economists, including two former Whitehall advisers, also raised concerns about the government’s policy.
But Treasury Chief Secretary Danny Alexander dismissed the letter by saying: “We’re not going to help the recovery by abandoning the rescue mission.
“These economists are people who said something similar, by and large, a year ago. We inherited a very difficult position – a huge budget deficit, there are a huge range of problems in the world economy at the moment, but we have a mission.’”
Osborne’s position was strengthened when several involved with the letter made clear that, despite their fears over a lack of economic growth, they still support the government’s deficit reduction plans.
Tim Besley, a former Bank of England monetary policy committee member who orchestrated the letter, said he was “disappointed with growth” but declared the Chancellor must stick to his plans.
