Parties’ pre-election spending plans shrouded in uncertainty, economist tells Alexander Daniels event in Birmingham…
Political parties should be forced to provide more information about their spending plans in the run-up to a General Election, a leading economist told a business audience in Birmingham.
Dr. Ceri Davies of the University of Birmingham addressed a seminar looking at the outlook for businesses both pre-and post-election, which was hosted by recruitment firm Alexander Daniels.
Analysing the plans of the three major political parties Dr. Davies told the audience at PwC’s Birmingham office that there would be contrasting macroeconomic consequences depending on who wins the election on 7th May.
“There is a £90 billion difference between the Conservatives and Labour in terms of what their plans will mean for debt as a percentage of GDP in 2019-20,” he said.
“That said, there is unanimity in that all of the main parties propose to reduce borrowing compared to current levels. The key differences are on the appropriate level of borrowing to aim for; how reductions in borrowing should be achieved; and whether it is appropriate to borrow to invest.”
But Dr. Davies said that meaningful analysis was made difficult by the fact that so much of what was being proposed by all of the parties was not fully costed.
“Markets hate uncertainty and elections can create this by weighing down on economic performance. This time, the level of pre-election uncertainty has been minimal, but that it is not to say that the policy differences between the parties will have potentially very different macroeconomic consequences.
“The real problem, as the Institute for Fiscal Studies has identified, is that so much of what is being proposed is not costed, which makes it very difficult for people to make an informed choice.
“In my view political parties should in future be compelled to provide more information about their policy proposals, possibly allowing for an audit by the Office for Budget Responsibility.”
A teaching fellow in economics, Dr. Davies’ research into macroeconomics has been presented at the annual conference of the Royal Economic Society and at seminars at the Bank of England, and also at the Federal Reserve Banks of Atlanta and Minneapolis in the United States.
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