More than 50 economists from around the world have signed a letter backing Gordon Brown’s economic plans, The Daily Telegraph can disclose. A total of 58 academics have signed the letter supporting Mr Brown, seen here with his wife Sarah. Photo: PA By Robert Winnett, Deputy Political Editor

9:18PM BST 14 Apr 2010

The letter has been organised by Labour and claims that Tory plans to cut Government waste this year could lead to job losses. It warns that public sector cuts could “destabilise” the economic recovery.

Among the 58 academics who have signed the letter, leaked to this newspaper, are respected economists Lord Layard, Lord Skidelsky, Lord Peston and Sir David Hendry.

The letter is set to be finally released more than two weeks after The Daily Telegraph published a rival letter signed by some of Britain’s most senior businessmen backing David Cameron’s tax plans.

More than 100 business leaders employing more than one million people have now supported the Conservative plan to largely stop Labour’s planned rise in National Insurance next year.

The Conservatives are planning to release new names of businessmen backing their plans in the coming days.

Sir Martin Sorrell, the advertising executive who moved his company overseas in protest at tax increases, indicated that he would return to Britain if corporate tax rates were cut as pledged by the Conservatives.

Goldman Sachs, the international investment bank, yesterday released research which appeared to back the Conservative approach.

The bank has studied economic recoveries in every major developed economy since 1975. It concluded that Governments reducing spending – rather than increasing taxes – to repair the public finances, “typically boosted growth”.

It is understood that Labour failed in an attempt to get business leaders to sign a similar letter on their proposals - and as a result was forced to turn to economists, a tactic the party has used previously.

However, the letter backed by academics – expected to be released ahead of the first debate between the leaders - makes no mention of the merits, or otherwise, of increasing National Insurance. The letter instead focuses on the alleged drawbacks of cutting public spending.

It says: “As expected, a key election issue concerns how much to cut government expenditure.

“The main opposition party now proposes to cut an extra £6 billion, on top of the measures already planned by the government. The cut is described as efficiency savings. But in macroeconomic terms it is just a cut by another name.”

The letter continues: “It will lead directly to job losses and indirectly to further falls in spending…At a time when recovery is delicate it could even affect confidence to the degree that we are tipped back into recession – with much larger job consequences.

“This is not a time for such a destabilising action. The recovery is still fragile.”

A total of 58 academics have signed the letter – including economists from Oxford, Cambridge, the London School of Economics and Harvard. There are also signatories from Austria, Canada, Germany, Australia, Spain and Denmark.

It is thought to have been organised by Labour peers.

About half the signatories to the letter have previously publicly backed Labour’s plans.

Senior Conservative sources described the letter as a “desperate move”.

“Economists always have differing views but business leaders, with experience of providing jobs, are unanimous in their backing for the scrapping of the National Insurance rise,” a source said.

The Conservatives are also likely to seize on a previous letter signed by 364 economists in 1981 criticising Margaret Thatcher’s economic policies - which ultimately helped Britain recover from near bankruptcy in the 1970s.

If elected, the Conservatives are planning to cut £6 billion in Government waste this year – which will enable them to largely stop a one-pence-in-the-pound rise in National Insurance from April 2011.

They describe the increase as a “tax on jobs” which will lead to 57,000 fewer people in employment.

The Tory’s efficiency savings will be made by not replacing public sector workers who leave and cutting spending on IT and procurement.
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