Leading economists have written to Tim Davie, the BBC's Director General, to object that some BBC reporting of the spending review "misrepresented" the financial constraints facing the UK government and economy.
Their letter follows what they say was "inappropriate" use of household analogies during coverage of Chancellor's autumn spending statement, and more broadly across the BBC's news output. The economists, from some of the UK's foremost universities and beyond, urge BBC journalists to avoid such misleading analogies when talking about the UK economy in future.
The letter, sent to Mr Davie on November 29, was also signed by Carys Roberts, IPPR's executive director. Here is its full text:
Dear Mr Davie,
As the UK’s foremost public service broadcaster, the BBC plays a crucial role in helping the British public understand the issues facing our country as a consequence of the Covid-19 pandemic. It follows that the BBC has a responsibility to ensure that its coverage is of the utmost accuracy.
We are writing to you with regards to coverage of the 2020 Spending Review on Politics Live, Wednesday 25th November. Specifically, when responding to the Office for Budget Responsibility’s public sector borrowing projections, BBC News political editor Ms Kuenssberg said that “this is the credit card, the national mortgage, everything absolutely maxed out”, and later went on to comment that “for next few years, there is really no money” (2h10m). We argue that this commentary misrepresents the financial constraints facing the UK government and reproduces a number of misconceptions surrounding macroeconomics and the public finances.
To focus on the “credit card” analogy, we would argue that this is never an appropriate metaphor for public finances. Maxing out a credit card would imply that the government is approaching a hard limit on its ability to borrow. This is not the case. It is the consensus amongst economists that the government should at this point in time not focus on reducing the deficit, but rather on delivering the spending necessary to secure a recovery from Covid-19. Modelling suggests that public debt as a proportion of GDP could actually fall were the government to embark upon a major investment package boosting jobs and growth, a position similar to that of the IMF in its flagship publication (pp 18-19) on the issue. This is in line with standard macroeconomic literature which stresses the beneficial effects of countercyclical government spending during crises.
Interest rates currently charged on government bonds are at record lows, so much so that the government is set to spend less on debt interest over the next five years than previously forecast, despite the rise in national debt over the course of the pandemic. Moreover, it is likely that interest rates will remain low for the foreseeable future; the interest rate charged on the 30-year gilt is currently 0.88%. These are not the signs of an institution approaching its credit limits. Rather, they signal appetite on the part of the government’s creditors to continue to fund its borrowing. In particular, economy-wide low interest rates indicate a desire for increased investment that is not forthcoming from the private sector.
Of course, a number of the above points were made by Ms Kuenssberg and other commentators on your programme. We highlight these particular statements not because they are a unique example across broadcasting, but because she is one of the most senior broadcasters in the country - with an audience of millions every week - and therefore sets a standard across the media.
When used by respected, neutral commentators, these “household budget” analogies carry an air of objectivity and exert a great influence on the public’s understanding of economics, even though they do not represent economic reality. With informing and educating the British public at the very heart of the BBC's mission, it is crucial economic issues are explained in an accurate way, and we ask that BBC journalists take care to avoid such analogies in the vital work they do.
Professor Guido Ascari
Professor of Economics, University of Oxford
Professor Gary Dymski
Professor of Applied Economics, University of Leeds
Professor Lord John Eatwell
Emeritus Professor of Financial Policy and Former President of Queens’ College, University of Cambridge
Professor Diane Elson
Emeritus Professor, University of Essex and Awardee of the Leontief Prize for Advancing Frontiers of Economic Thought
Professor Daniela Gabor
Professor of Economics and Macrofinance, UWE Bristol
Professor Stephany Griffith-Jones
Financial Markets Director, Initiative for Policy Dialogue, Columbia University
Professor Susan Himmelweit
Emeritus Professor of Economics, Open University
Professor Maureen Mackintosh
Professor of Economics, Open University
Professor Michael McMahon
Professor of Economics, University of Oxford
Professor Simon Mohun
Emeritus Professor of Political Economy, Queen Mary, University of London
Professor Dame Henrietta L. Moore
Director of the Institute for Global Prosperity, University College London
Professor Sir Anton Muscatelli
Principal and Vice-Chancellor, University of Glasgow
Professor Susan Newman
Professor and Head of Economics, Open University
Professor Özlem Onaran
Professor of Economics and Co-Director of the Institute of Political Economy, Governance, Finance and Accountability, University of Greenwich
Professor Jonathan Portes
Professor of Economics and Public Policy, King’s College London
Professor John van Reenen
Ronald Coase Chair in Economics and School Professor, Department of Economics, London School of Economics
Executive Director, Institute for Public Policy Research (IPPR)
Professor Dani Rodrik
Ford Foundation Professor of International Political Economy at Harvard's John F. Kennedy School of Government
Professor Lord Robert Skidelsky
Emeritus Professor of Political Economy, University of Warwick
Professor Alasdair Smith
Emeritus Professor of Economics, University of Sussex
Professor Tony Thirlwall
Professor of Applied Economics, University of Kent
Professor Jan Toporowski
Professor of Economics and Finance, SOAS, University of London
Professor David Vines
Emeritus Professor of Economics and Emeritus Fellow of Balliol College, University of Oxford
Professor Simon Wren-Lewis
Emeritus Professor of Economics and Fellow of Merton College, University of Oxford
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