Spending cuts could raise deficit, says Roger Bootle

THE coalition government’s spending cuts could result in the deficit rising rather than falling unless they are accompanied by growth policies, a leading economist has warned.

Roger Bootle, managing director of Capital Economics, claimed that an approach based on austerity would not be sufficient to pull the UK out of the current economic crisis and called for more to be done to engineer faster economic growth.

Without a focus on economic growth the deficit the government is aiming to reduce could instead rise over the next couple of years, according to Bootle.

“Austerity alone is not the answer,” he said. “For the world as a whole there’s no route from austerity to prosperity. For an economic recovery someone has to spend; recovery is an increase in income, output and spending.”

He added: “There is a possibility that, having forced through these measures, we find in a year or two that the deficit is even higher.”

However Bootle, speaking at the group’s annual conference in Edinburgh, said a growth solution based on GDP growth that reduces the significance of debt would require time and patience. “Although growth is comparatively painless on its own, it’s not enough, it must be combined with some manner of fiscal restraint.