Latest updates: Rishi Sunak will reveal budget measures on Wednesday, including extending the Covid furlough scheme until the end of September
- UK budget to extend furlough until end of September
And there was a third leading economist on the Today programme this morning arguing that the government should not be implementing measures now to bring down the budget deficit. It was Ken Rogoff, the former chief economist at the International Monetary Fund. He told the programme that he had made this point in a conversation with Rishi Sunak, the chancellor. He said:
We’ve spoken once and, certainly at the time, and I’d say it now, we are in the middle of a war and you should not be worrying excessively about the budget deficit and about debt.
You can worry about that at the other side.
I think it’s naive to think we should just keep running budget deficits forever to deal with inequality.
But in this current situation – we’re in catastrophe relief here – the downside is so much greater than the longer term, and countries have had high debts before and get their way out of it.
Making a similar argument to Paul Johnson (see 9.32am), Sir Robert Chote, the former chairman of the Office for Budget Responsibility, told the Today programme that it would be a mistake to try bringing down the national debt too soon. He said:
The argument that we have borrowed an enormous amount of money – and goodness we have over the last year to 18 months – and that all has to be paid back very quickly, there is no robust case for making that argument.
Most economists would accept that if you have the size of the public debt jump up so you have a temporary increase in borrowing that increases your stock of debt, you don’t want to try to reverse that very quickly or very aggressively.
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