Forum for National Recovery: Economists press case for leadership: A meeting organised by the 'Independent' in London yesterday to discuss the manifesto for change heard

DISMAY AT the Government's lack of leadership in managing the economy emerged at the Independent's meeting in London yesterday on a 'Manifesto for National Recovery'.

Many of the country's leading economists urged the Government to tackle the long-term structural problems which face Britain - a chronically weak manufacturing industry and an undereducated and undertrained workforce - as well as the short-term need to get national output growing again.

Speakers called for the Government to invest more in Britain's infrastructure - roads, rail, hospitals and schools - to prevent recession degenerating into slump. But leading economists warned that the shortfall between government spending and tax revenue might soon stray into a danger zone, in which the country's public finances could become an Italian-style debt trap. There was almost universal backing for a rise in taxes in the medium term.

The meeting was called by the Independent to address the deepening sense of economic malaise and drifting political leadership after sterling's enforced departure from the European exchange rate mechanism.

It featured sessions on whether the current recession was deepening into slump and what could be done to address that danger. Speakers also commented on how much risk could be taken with government borrowing. The Government has been predicting for more than a year that the economy is poised for recovery. But speakers were unconvinced that Britain showed any signs of pulling out of what is now the longest recession since the Second World War. One even argued that Britain was facing 'terminal decline'.

Patrick Minford, professor of economics at Liverpool University and one of the Chancellor's 'seven wise men' appointed to defuse criticism of Treasury forecasting, argued that the risk of a deepening recession demanded further interest rate cuts.

Gordon Pepper, of the City University Business School, said that the huge overhang of consumer and business debt meant there was a risk that the economy could move into depression in the next one or two years, but also 'that we might then have another inflationary boom'.

Speakers from the floor said that interest rates were less important as a stimulus than a general revival of confidence. This needed the Government to demonstrate that it had a clear idea of where the economy should be going.

Part of this vision should be a greater emphasis on education and training. This would help reduce unemployment, itself a drain on confidence among consumers and businesses. It would also make Britain a more attractive base for manufacturers, hopefully allowing the country to avoid a ballooning trade deficit by exporting more and importing less.

Speaker after speaker said that the measures in the Autumn Statement recovery package had not made them confident that a slump could be avoided. Rosemary Radcliffe, chief economist of Coopers & Lybrand, said: 'I don't think the monetary or fiscal relaxation to date is enough to avoid a slump.'

In addition, two economists called on the Treasury to abandon its full funding rule, in which the budget deficit in any given year must be fully financed by sales of gilt-edged stock to investors outside the banking sector in the same period.

Professor Tim Congdon, another of the 'seven wise men', said that a slump could be avoided if the Treasury simply borrowed from the banking sector. This tactic would have the effect of promoting an acceleration of broad money supply growth.

He was joined by Roger Bootle, chief economist of Midland Montagu and an expert on the gilt market, who warned that the Government was facing a crisis in attempting to finance the budget deficit according to the full funding rules.

He also urged a further fall in interest rates and the pound to help manufacturing grow, boost exports and encourage industry to make products which at present can only be bought from foreign manufacturers.

Longer term, he called for 10-year programme of national revival. 'The whole economy needs a sense of leadership and direction,' Mr Bootle said.

Manifesto for national recovery

Cut interest rates to 5 per cent straight away

Push ahead with major road and rail building projects

Take immediate measures to revive the housing market

Tell the banks to stop foreclosing on sound businesses

Establish an independent Bank of England

Balance budget over the course of an economic cycle

Replace Treasury forecasters with an independent body

Set up a new Department of the Economy

Eventually restore pound's link with EC currencies

Save the Gatt free trade talks from French veto

(Photographs and graph omitted)

voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
voicesSiobhan Norton on why she eventually changed her mind
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Life and Style
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

BI Manager - £50,000

£49000 - £55000 per annum + competitive: Progressive Recruitment: My client is...

BI Project Manager - £48,000 - £54,000 - Midlands

£48000 - £54000 per annum + Benefits package: Progressive Recruitment: My clie...

VB.Net Developer

£35000 - £45000 per annum + competitive: Progressive Recruitment: If you're pa...

SAP Business Consultant (SD, MM and FICO), £55,000, Wakefield

£45000 - £55000 per annum + competitive: Progressive Recruitment: SAP Business...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn