Rachel Reeves risks entering an economic "doom loop" if she continues to cut spending, a former Bank of England chief economist has warned. Andy Haldane, who was with the Bank for 32 years until 2021, said the Office for Budget Responsibility's (OBR) forecast in March could lead to less investment and spending.
He told Sky News' Politics Hub with Sophy Ridge: "It would be deeply counterproductive to both growth and to the fiscal position if that led to a cutting back on investment and indeed in spending more generally. "Then I think you really are into a doomed loop between debt and growth. And that's a situation to avoid at all costs.".
The OBR will publish an economic and fiscal forecast on 26 March, five months after its last forecast, which said the October budget was unlikely to increase economic growth over the next five years. Mr Haldane, who became well-known for his speeches during COVID, said his concern depends on how much government spending is cut by the chancellor this spring.
"For me, I think some of the gloom and doom about both the economy and in bond markets is slightly overdone," he added. 2024 review: Some of the year's big moments in eight charts. UK economy shrinks again in October, official figures show. Airports join budget backlash with warning of business rates 'catastrophe'.
