Slowing government investment will hurt Britain’s growth, leading economists tell Reeves

Leading economists have warned the Chancellor that curbing government investment will harm Britain’s growth.

In a letter to the Financial Times, the eight senior figures urged Rachel Reeves to reverse plans she took over from the Conservative government.

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

Labour has pledged to invest an extra £4.7 billion a year in energy and the green transition, but that would still see investment as a share of GDP fall.

Among the signatories to the FT letter is former cabinet secretary Lord O’Donnell, who served under Tony Blair, Gordon Brown and David Cameron.

Also signing the letter were former Trade Secretary Lord O’Neill and Professor Mariana Mazzucato of University College London – whose idea of ​​a “mission-driven” government inspired Sir Keir Starmer.

“The government has inherited spending plans that imply substantial real cuts to public investment in the current term,” the letter said.

‘We do not see how the planned ‘decade of national renewal’ can take place if these cuts are implemented.’

The letter went on to say that ‘low investment leads to both a weaker economy and greater social and environmental problems’.

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