Who to trust - business leaders or economists?

No-one has a monopoly on wisdom

Neither business leaders nor economists have a monopoly of wisdom on what's good for Britain or are free from political bias. But it is perhaps therefore all the more important to remember that those paid to think about how best an economy should be run don't necessarily agree with those paid to run companies.

On the day that more than 100 past and current business leaders have written to the Telegraph that the "Conservative-led government has been good for business and has pursued policies which have supported investment and job creation", a survey of academic macro-economists has come up with a different conclusion.

The Centre for Macroeconomics, which groups leading economists from Cambridge University, LSE, University College London (UCL), the Bank of England and the National Institute of Economic and Social Research (NIESR), polled what it calls its 50 experts on whether the "austerity policies of the coalition government have had a positive effect on aggregate economic activity (employment and GDP) in the UK".

Its result was a decisive no.

Two-thirds of the 33 economists who responded disagreed or strongly disagreed with the proposition that austerity had been good for the UK.

Now to be clear, this is not a scientifically robust poll of those who know best. But nor is the Telegraph's letter - and those those who took part in the economists' survey are no less distinguished in their field than the business signatories.

Among those who disagreed strongly that austerity had been a good thing, Oxford University's Simon Wren-Lewis (never shy to express an opinion) asked if the question was "a joke", adding that "the only interesting question is how much GDP has been lost as a result of austerity" (which he thinks could be as much as 10% of national income).

John Van Reenen of the LSE, who also disagreed with austerity, said "UK GDP is about 15% below where we would have expected on pre-crisis trends... Premature austerity has damaged UK welfare and, as I and others argued at the time, delaying consolidation would have left the UK in a much stronger position than it is today."

But Sir Charlie Bean, former deputy governor of the Bank of England, neither agreed or disagreed. And he said: "The UK consolidation was never undertaken in the belief that it would boost demand directly, but rather that it would reduce the likelihood of a loss of market confidence in the UK government's economic policies, which - had it occurred - would have necessitated a much sharper consolidation."

By contrast, Patrick Minford, of Cardiff Business School, agreed with the austerity policy, He argued: "The coalition government has managed to set a definite direction towards deficit reduction without moving so rapidly as to destabilise the economy. Essentially it has halved the deficit/GDP ratio in this Parliament. In spite of this correction and the reduction in public sector jobs, employment has grown strongly and recovery has been established."

Policy guide: Where the parties stand

The economists were also asked whether the outcome of the coming general election would have "non-trivial consequences for aggregate economic activity (employment and GDP)".

An overwhelming majority, 77%, either agreed or strongly agreed that the economic impact of the election result would not be trivial.

Their arguments for why the outcome would matter were not uniform.

Costas Milas from the University of Liverpool said: "This is conditional on whether a Brexit referendum (a referendum on the UK leaving the EU, as promised by the Tories) takes place. A Brexit referendum will add to investor uncertainty, pushing up borrowing costs that companies face and therefore delay their investment decisions. As a result, economic growth will take a hit."

Michael Wickens of Cardiff Business School and York University said: "Given the closeness of the likely outcome of the election, the Labour Party's denial of their role in ruining the public finances prior to 2010, their continued focus on increasing public expenditure and the likelihood of needing a working arrangement with the even more spendthrift SNP, the prospects for the UK are very precarious - almost on a knife-edge."

Meanwhile, Christopher Martin of Bath University said: "The difference between current Conservative and Labour spending plans is about £40bn per year by the end of the next Parliament. Even the most hard-core, anti-Keynesian would argue that £40bn a year has non-trivial consequences."