Letters from economists wont reduce the UK deficit

Published: 9:12PM GMT 19 Feb 2010

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Who said the art of letter writing was dying? The week began with a letter from 20 economists and it ended with a pair of missives from 67 practitioners of the dismal science. For good measure, we even had a midweek note from the Governor of the Bank of England to the Chancellor explaining why the consumer prices index has spiked. Are we any the wiser for this flurry of epistolary activity? Leaving aside the Governor"s letter (as ever, it was refreshingly analytical rather than political), probably not.

For this slightly unedifying spectacle the "my list of signatories is longer than yours" boasts are already being bandied about is party warfare by proxy. The original 20 broadly supported the Conservative view that deficit reduction must start now, while yesterday"s double-barrelled riposte favours the government stance that the recovery is too fragile to contemplate spending cuts yet. It would take a Jonathan Swift to milk the full satirical potential of massed ranks of economists taking potshots at each across the letters columns of newspapers. Entertaining though it is, it does not signify a great deal. We are witnessing not so much the clash of big ideas as angels dancing on the head of a pin.

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As Jeremy Warner argues on this page, the reality is that neither party has a great deal of scope for doing much about the deficit in 2010, even if it wanted to. Serious budget cuts cannot be effected at the flick of a switch. What is needed are credible plans for future years. That is what the markets are looking for and so are business leaders. They want some clarity about the likely trajectory of debt reduction in the medium to long term. The Government says it will halve the deficit in the lifetime of a parliament, in our view a disappointingly unambitious target. The Tories, in contrast, say they will pay down the "bulk" of the deficit in that timescale a position backed, incidentally, by the Governor of the Bank of England, Mervyn King. What they have been unwilling to say is how they will achieve this. Paradoxically, each camp can use January"s shocking borrowing figures to justify their positions.

The imminence of a general election is imposing a baleful influence. The Government is determined not to offend its public-sector clientele before polling day and will therefore keep the spending spigot open. The Tories, meanwhile, have been sounding a worryingly uncertain note. In his party conference speech last October David Cameron talked candidly about the tough choices that lay ahead. Yet within weeks the party was rowing back from that position, no doubt alarmed at the negative feedback from the focus groups.

In other words, it is the politics of the deficit, rather than its reduction, that has been dominant. It was no coincidence that within hours of yesterday"s letters appearing, the Prime Minister rounded on the "well-financed Right-wing" that is trying to "scare people into accepting a bleak and austere picture of the future". This is clearly not going to be an election campaign for the fastidious. Mr Brown"s attempt to depict himself as the only man who can secure the recovery will, however, ring hollow among those who largely blame him for getting us into this mess in the first place.

Even so, dealing with the deficit continues to present a formidable challenge to the Conservatives. We believe they are being more honest in stressing the scale of the threat and the need to start tackling it now. Yet they remain too tentative. The higher rate of tax is going up in a few weeks, the very last thing the economy needs just now. But, of course, that increase is not designed to raise revenue, rather to put the Tories on the spot and it is working. In refusing to commit itself to scrapping the tax rise, the Opposition is displaying a lack of conviction that it may come to rue in the election campaign.