Economic expert: Don't cut the deficit
Tuesday, 9 February 2010 12:00 AM
By politics.co.uk staff
A Nobel-prize winning economist has issued a robust defence of Gordon Brown's economic policy, and warned against any immediate cuts to the deficit.
Joseph Stiglitz, chief economic adviser to former US president Clinton and chief economist at the World Bank, spoke out against David Cameron's argument that a series of relatively modest cuts will reassure the markets about Britain's financial arrangements.
"You're dealing with a crazy man," he told the Independent.
"You're asking what I can do to placate a crazy man? Having got what he wants he will still kill you."
Mr Brown and chancellor Alistair Darling have long argued that premature cuts to fiscal spending could cripple the UK's economic recovery, although the government is committed to reducing the deficit by half in four years.
"If there is a premature withdrawal of stimulus it is more likely that there will be a 'double dip'," Mr Stiglitz said.
"You want to show a sensitivity towards the deficit but also sensitivity towards the timing [of a withdrawal of stimulus], and the fact is that recovery is not robust."
The economist, who dined with Mr Brown and Mr Darling last night, also stressed the superior nature of the British response to the financial crisis compared to the American response.
"What Brown has done in terms of banks so far is far better than what the US did; he demanded better compensation for providing money, better accountability, better attempts to restart lending, than in the US," he said.
The comments come at a bad time for Mr Cameron, with a Populus poll for the Times today showing confidence in his handling of the economy slipping.
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