Research finds economy would grow faster under Labour’s plans than the Tories’

New research published by the National Institute of Economic and Social Research (NIESR) shows that the UK economy would grow at a quicker rate under Labour’s plans than the Tories’. The news will be welcomed in Labour’s Shadow Treasury team, as polling consistently shows Miliband and Balls trailing Cameron and Osborne on handling the economy.

NIESR’s report finds that under both Labour and Lib Dem economic plans, GDP would grow quicker and unemployment fall faster than under implied Conservative plans.

As Left Foot Forward report:

“In 2018, the economy under Labour and Lib Dem plans would grow 0.2 per cent faster than current GDP estimates, compared to 0.1 per cent under the Conservatives. By 2019, Labour and Lib Dem plans would see GDP growth at 0.5 per cent above current estimates compared to a rate of 0.2 per cent for the Tories, according to the think tank.”

You can see the report, with detailed table, here.

The research indicates that a slower paced deficit reduction (there is about £50bn worth of difference between the Tory and Labour plans) would aid the economy over the next four years.

The Tories have already started making promises of tax cuts for the next parliament, presumably once the deficit has been cleared – despite having already missed their deficit reduction target for this parliament. Their hope is that these tax cuts will help to improve economic growth before a 2020 election. Labour’s approach to reducing the deficit would see a greater emphasis on economic growth to raise tax receipts and limit the need for spending cuts.