LONDON, Feb 14 (Reuters) - Leading economists called on the British government to start cutting the country's record deficit shortly after the upcoming election, running contrary to Prime Minister Gordon Brown's policy on public spending.
The economists, who include a former Bank of England policymakers, said Brown's policy lacked urgency and risked a lack of confidence in financial markets.
'In the absence of a credible plan, there is a risk that a loss of confidence in the UK's economic policy framework will contribute to higher long-term interest rates and/or currency instability, which could undermine the recovery,' they said in a letter to The Sunday Times.
'In order to minimise this risk and support a sustainable recovery, the next government should set out a detailed plan to reduce the structural budget deficit more quickly than set out in the 2009 pre-budget report.'
They said that while the exact timing should be sensitive to developments in the economy, the Labour government's goal should be to eliminate the structural current budget deficit over the course of a parliament, with the first measures beginning to take effect in the 2010-11 fiscal year.
The bulk of the fiscal consolidation should be borne by reductions in government spending, they said.
The timing of when to start tackling Britain's record 178 billion pounds ($279 billion) deficit has emerged as a dividing line between the two main political parties in the run-up to a national election due to be held before June.
Brown has said the economic recovery is still too fragile to cut spending just yet and will only begin next year.
The opposition Conservatives have promised an emergency budget within 50 days of taking office, if elected.
Signatories of the letter included Tim Besley, who served on the Bank of England's Monetary Policy Committee, Howard Davies, former chairman of the Financial Services Authority, Ken Rogoff, professor of economics at Harvard University.
($1=.6373 Pounds)
(Writing by Avril Ormsby; Editing by Mike Nesbit) Keywords: BRITAIN LETTER (avril.ormsby@reuters.com ; +44 207 542 1816; Reuters Messaging: avril.ormsby.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The economists, who include a former Bank of England policymakers, said Brown's policy lacked urgency and risked a lack of confidence in financial markets.
'In the absence of a credible plan, there is a risk that a loss of confidence in the UK's economic policy framework will contribute to higher long-term interest rates and/or currency instability, which could undermine the recovery,' they said in a letter to The Sunday Times.
'In order to minimise this risk and support a sustainable recovery, the next government should set out a detailed plan to reduce the structural budget deficit more quickly than set out in the 2009 pre-budget report.'
They said that while the exact timing should be sensitive to developments in the economy, the Labour government's goal should be to eliminate the structural current budget deficit over the course of a parliament, with the first measures beginning to take effect in the 2010-11 fiscal year.
The bulk of the fiscal consolidation should be borne by reductions in government spending, they said.
The timing of when to start tackling Britain's record 178 billion pounds ($279 billion) deficit has emerged as a dividing line between the two main political parties in the run-up to a national election due to be held before June.
Brown has said the economic recovery is still too fragile to cut spending just yet and will only begin next year.
The opposition Conservatives have promised an emergency budget within 50 days of taking office, if elected.
Signatories of the letter included Tim Besley, who served on the Bank of England's Monetary Policy Committee, Howard Davies, former chairman of the Financial Services Authority, Ken Rogoff, professor of economics at Harvard University.
($1=.6373 Pounds)
(Writing by Avril Ormsby; Editing by Mike Nesbit) Keywords: BRITAIN LETTER (avril.ormsby@reuters.com ; +44 207 542 1816; Reuters Messaging: avril.ormsby.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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