Britain’s economic pundits

This is the text of a box from this week’s Fund Strategy cover story where are I discuss some of the main pundits in Britain’s economic policy debate. On Friday I will publish a list of key references in the discussion.

These are some of the most high profile commentators in the current economic debate. The “pro-stimulus” pundits are broadly in line with Labour’s economic policy while the “pro-austerity” commentators are generally favourable to the Conservatives. However, since they are not politicians they are free to deviate from official policy on many questions.

The pro-stimulus has many more high profile supporters than the anti-stimulus camp. It does not follow of course that the case for continued stimulus is necessarily correct.

Pro-stimulus

David (“Danny”) Blanchflower. Professor of economics at Dartmouth College in New Hampshire. Former member of the Bank of England’s monetary policy committee. Economics editor of the New Statesman. Frequently derides “recession deniers” and has called on the government to implement an immediate stimulus including a reduction in VAT, a cut in National Insurance to anyone under 25 and £50 billion in infrastructure spending on “shovel ready” projects.

Paul Krugman.  Nobel prize-winner in economics. New York Times columnist. Although he is American he often criticises the British government for imposing premature austerity. Krugman sees the British economy as stuck in a “liquidity trap” where the root problem is a lack of effective demand. The economy therefore has a lot more potential than the government assumes. He emphasises that once the economic cycle turns he is likely to become a fiscal hawk.

Martin Wolf. Chief economics commentator at the Financial Times (FT). Argues against the view that the government’s tough fiscal stance is necessary for the country to retain economic credibility. On the country, for him credibility depends on promoting growth. Shares the view put forward by Fraser Nelson (see below) that the fiscal squeeze has hardly begun (FT May 3, 2012). However, for Wolf this means that more stimulus, rather than more austerity, is necessary. Like Krugman sees most of Britain’s deficit as cyclical rather than structural.

Anti-stimulus

Niall Ferguson. Professor of history at Harvard. Too busy with his television programmes and books to comment frequently on the British economy. However, has argued that the government has had to alternative to bringing public finances and debt under control. Echoes the government line that a problem of excessive debt cannot be solved with more debt. Upbeat about Britain’s economic prospects although concerned about the possible impact of the eurozone crisis.

Allister Heath. The editor of CityA.M., a free newspaper distributed in London. A supporter of the free market economics of Friedrich Hayek and an advocate of a “flat tax” in which there is one marginal rate of tax. Chairman of the 2020 Tax Commission.

Fraser Nelson. Editor of the Spectator magazine and Telegraph columnist. Argues from a free market perspective that the government has gone nowhere near far enough in imposing austerity. Recently argued that on the economy the prime minister “seems trapped inside a failed Brownite consensus” and of making “minimal cuts imposed with maximal dramatics”. (Telegraph May 17, 2012). Supports a dramatic reduction in the tax burden and a radical simplification of the tax system.