Starmer speech: Unstable UK economy won’t be fixed by public spending cuts

Lydia Prieg, head of economics at the New Economics Foundation (NEF), responded to Keir Starmer’s speech at the Resolution Foundation conference. She said:

“12 years of public spending cuts and privatisation have left the foundations of our economy weak and unstable. Crumbling infrastructure and decimated public services are colliding with an aging population. Starmer is kidding himself if he believes he can maintain current living standards, let alone improve them, without more government spending and investment.

“It’s clearly important to manage public finances responsibly, and any government will have plenty of ways to safely raise funds for vital public spending. They could start with some easy choices, like undoing tax cuts that benefit the very richest. Reversing the tax cuts in last month’s autumn statement would raise around £20bn. When it comes to borrowing, recent UK bond sales show there is market demand for more UK government debt, and we still have a debt-to-GDP ratio well below similar economies like the US, Japan and Italy.

“To repair the economy and our public services, we need to invest in the NHS and schools to build a skilled and healthy workforce, in home insulation to get energy bills falling, and in key industries to get wages rising in every part of the country. Personal finances and living standards are in an emergency, the public finances aren’t.”