David BlanchflowerA change of economic policy is "desperately required" from the UK Government, according to a group of leading economists.

Four expert figures, including Professor David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, and Nobel Prize winner Professor Sir James Mirrlees have called for increased capital investment to help stimulate economic growth.


In a letter to Scottish newspapers the group stressed "the importance of having the courage to admit the need for change when it is so desperately required".

As well as being signed by Prof Sir James, of Cambridge University, and Prof Blanchflower, a professor at Dartmouth College in the US who also holds a post at Stirling University, the letter is signed by Professor Andrew Hughes Hallet of St Andrews University, Professor Drew Scott from the University of Edinburgh and Professor Mike Danson of University of West Scotland.

It comes on the day Prime Minister David Cameron pledged to get the planning system "off people's backs" and revive the economy by easing restrictions for homes and businesses. Treasury funding of £300 million has been found to help provide up to 15,000 such properties and bring 5,000 empty homes back into use, Downing Street said.

New legislation will provide Government guarantees of up to £40 billion of major infrastructure projects and up to £10 billion of new homes, including a move to guarantee the debt of housing associations and private sector developers.

The four professors said capital investment is needed, arguing that "only through this form of fiscal stimulus can the UK hope to create a virtuous cycle of jobs, growth and confidence". The Scottish Government has repeatedly called for more capital funding to be pumped into major infrastructure projects in a bid to revive the economy.

Capital spending north of the border was accelerated following the 2008 recession, with First Minister Alex Salmond and other Scottish ministers repeatedly urging Westminster to adopt a similar "plan MacB" approach.

In their letter the four professors point out that the latest Scottish GDP figures show economic growth fell by a "marginal" 0.1% in the first three months of this year, compared with a fall of 0.4% for the UK as a whole.

They said: "We support the First Minister's repeated calls for UK Government capital investment to stimulate, not just construction, but by extension broader economic growth. We argue that only through this form of fiscal stimulus can the UK hope to create a virtuous cycle of jobs, growth and confidence."