The New Statesman claims to have an exclusive this evening, saying that many of the economists that signed a Sunday Times letter in 2010 backing Osborne's deficit reduction strategy have now turned against it. The Telegraph has bought it, hook, line and sinker. "Only one of the 20 economists who put their names to the letter in February 2010 backing Mr Osborne’s deficit reduction plan said he continued to have faith in the Chancellor", we are told. But is that really so?
First, the easy point that half the economists either refused to talk to the New Statesman or were on holiday. But even so it might be considered striking, and would certainly be a story, if nine of those original 20 economists had now turned against Osborne's strategy. But did they? What was it they signed – it's right there in the New Statesman article: "in order to be credible, the government's goal should be to eliminate the structural current budget deficit over the course of a Parliament, and there is a compelling case, all else equal, for the first measures beginning to take effect in the 2010/11 fiscal year." So if they've changed their minds they either ought to think the Government shouldn't have been eliminating the structural current deficit over the course of this Parliament or they think that shouldn't have started in 2010/11. How many of them say they've changed their mind on either of these things, according to the comments they published in the New Statesman? Zero. That's right. The New Statesman provides a list of their comments, and not one of the economists says he now thinks cuts to the structural current budget deficit should be slowed or should have started later.
Now that's more than a bit odd, since George Osborne has definitely changed his mind on that question. In the original deficit reduction plan the structural current deficit was to be eliminated in 2014/5. Now that isn't scheduled to happen in this Parliament. So one might think some of these economists would say they agreed with Osborne that cuts to current spending should have been slowed. But they don't.
What nine of them do say is that the cuts to capital spending should stop and capital spending might even increase. But since that's capital spending, not current spending, that doesn't affect the structural current deficit. So they could propose that capital spending should go up tenfold and that would not in any way mean they were reversing what they said in their 2010 letter. Indeed, one of the nine, Roger Bootle, said recently in terms that increasing capital spending now "would not necessarily imply that Osborne’s Plan A was wrong".
Capital spending has, of course, been cut materially since 2009. Virtually none of that was planned by Osborne. The cuts to capital spending were scheduled by Alistair Darling. Osborne has merely implemented the Labour Party's plan. And the considerable majority of those cuts have now occurred. So Osborne essentially agrees with those nine economists that cuts to capital spending should now stop.
So the New Statesman exclusive appears to be that, of the ten economists they could get hold of, nine of them say there should not be material further cuts to capital spending (as does Osborne) and not one of them says that current spending should not be cut (as per Osborne's plan). And Osborne should be upset by this because…?