By Kirsty Walker

PUBLISHED: 18:15 EST, 15 August 2012 | UPDATED: 18:15 EST, 15 August 2012

Economists say Chancellor George Osborne, pictured, should abandon his plan for a new strategy

Economists say Chancellor George Osborne, pictured, should abandon his plan for a new strategy

George Osborne was hit with a major blow last night after leading economists dramatically withdrew their support for his deficit reduction plans.

Twenty prominent economists publicly backed his economic strategy in the run-up to the General Election in a move which the Chancellor hailed as a 'significant moment'.

But the New Statesman yesterday reported that two and a half years on just one of the economists is willing to back the Chancellor's strategy.

Nine out of the twenty had lost faith in Mr Osborne and urged him to stimulate growth through tax cuts and higher infrastructure spending.

The others responded by saying 'no comment' or that they were 'on holiday'.

Their intervention will heap pressure on Mr Osborne at a time when the UK is mired in a double-dip recession and the Government is set to borrow 11.8billion more than Labour was planning.

The Chancellor has faced increasing calls to abandon his austerity strategy this week after new figures revealed that the UK had been outperformed by Germany and France in recent months.

Growth figures released on Tuesday showed the UK's main European competitors were weathering the economic storm more effectively, despite the eurozone standing on the brink of a double-dip recession.

Britain's performance was as bad as Italy's - although Rome has begged the EU for help to overcome its debt burden.

The original letter by the economists was seen as a turning point in the run-up to the 2010 General Election as it gave the Conservatives deficit-reduction plan a powerful endorsement.

The letter to the Sunday Times in February 2010 said that the Government's goal must be to 'eliminate the structural current budget deficit over the course of a Parliament.'

New figures revealed that the UK had been outperformed by Germany and France in recent months

New figures revealed that the UK had been outperformed by Germany and France in recent months

The economists added that: 'There is a compelling case, all else equal, for the first measures beginning to take effect in the 2010/11 fiscal year.'

But one of the signatories Roger Bootle, managing director of Capital Economics, now says: 'If I were chancellor at this point, I would alter the plan, I would stop the cuts to public investment and I might even seek to increase it.

Roger Bootle, managing director of Capital Economics, pictured, said George Osborne should stop cuts to public investment

Roger Bootle, managing director of Capital Economics, pictured, said George Osborne should stop cuts to public investment

'The key thing is to try and get the private sector to spend its money and that may require a bit of government spending to prime the pump.'

Danny Quah, professor of economics at the LSE, added: 'The fear that UK borrowing would become overly costly has become much less relevant.

'That has also reduced the pressure for dramatic debt reduction, compared to the perceived monetary stance at the time I signed the letter.

So, have I changed my mind since signing the letter? Yes. Because circumstances have changed.'

David Newbery, Emeritus Professor of Economics at Cambridge University, said: 'We need growth, and that requires investment.

'In a recession bordering on a depression, public investment in infrastructure that has a high pay-off even in good times must make sense.'

The only economist to support Mr Osborne's plans was Albert Marcet from the Barcelona Graduate School of Economics.

He told the magazine: 'I am quite sure there is no room for Keynesian-type policies to encourage growth in the fourth year of a recession; there is virtually no economic theory that will support that.

'I see no urgency to change the schedule in deficit reduction.'

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The "man in the street" knows more about basic economics than most economists!

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This was always a "suck it and see" government. The Tories had no policies before Cameron became PM and if the U-Turns are anything to go by, policy now is made on the hoof. As for economists now doing a U-Turn on Osborne anybody but the biggest optimist would have told you it doomed from the start. The days have gone when people just accepted austerity. We want more from government like an economy that is growing and a budget from the Chancellor that is fair. Osborne and Cameron have failed on both counts.

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Brown recorded four years of budget surplus' 1998 - £703 million, 1999 - £12 billion, 2000 - £16.7 billion, 2001 - £8.4 billion. - Yes it went wrong and world problems put an end to the economy. History is that point where we strip out the propaganda and start to realise that not all of Brown years were a disaster - Osborne is not bright enough to get it wrong let alone right.

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What took them two and half years ????????

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How can they really think that spending more, and borrowing more, is going to help this country. It really helped Greece get itself into an almighty mess. Do we want the same?

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A politician once said " we all know what needs to be done to get the country back on the level. It is getting elected again once we have done it that is the problem " And therein lies the whole problem. All the three main parties refuse to do what needs to be done as they simply seek to remain in power. Even when staying in power is to the detriment of the country and its people. Hard and very unpopular decisions have to be made and they simply all refuse to make them as they have done for decades. There needs to be a revolution by the people to stop this lunacy !

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what idiots they were to encourage Osborne in the first place.... I blame all the people who signed letters supporting slash and burn daft policies which includes the directors of many shops and businesses. It made me feel ill at the time to read the people like Stuart Rose were writing in saying cut this and that while expecting me to keep spending money propping up their businesses. So I've not shopped at M and S, Tesco or Boots since. They should stay out of politics and that includes that silly man Mr King at the BoE.

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What is an economist besides a mouth on legs. None of them are taken to task over their forecasts for the future, when that so called point arrives, and as usual they are wrong.

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Economists are so good at doing U turns and distancing themselves from their previously claimed beliefs. It amazes me that there are so many of them employed, for many of their so-called intelligent proclamations one might as well just stick a wet finger to the wind!

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We all know the reason this clueless fool got the job of chancellor in the first place was because he was Dave's best mate. He hasnt got the faintest idea how to run the economy. I can still remember how those so called 'economists' and even worse newspaper columnists pre-election raved that with a Tory government life would be nothing short of rosy. The most memorable thing being that they said there most definitely would not be a double dip recession. The truth of course was that the wheels were set in motion for a double dip the moment Osborne thought it would be a bright idea to hike the VAT up at the same time as sacking people. Not only that but as we can see today, companies such as those running the trains have been allowed a free for all in hiking their prices meaning it is too expensive to even travel for work! I hate Labour but Osborne makes even Gordon Brown seem like a genius.

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