Expert advice for George Osborne on how best to reinvigorate the economy in his budget on Wednesday
Growth and how to achieve it will be at the heart of George Osborne's fourth budget as chancellor. While the United States, Germany and Canada have all seen national output rise above pre-recession levels, Britain's economy is still 3% smaller than it was when activity peaked five years ago.
Osborne blames the last Labour government, rising commodity prices and the crisis in the eurozone for the weak performance of the economy over the past two years – a period in which gross domestic product has moved sideways. Ed Balls, the shadow chancellor, says that it is the chancellor's fault that a fall in gross domestic product in the first three months of 2013 would see the UK tumble into an unprecedented triple dip recession.
In the run-up to the budget the chancellor has not been short of advice on what to do to get Britain moving. Members of the Guardian's growth panel, chosen to reflect views from across the political spectrum, believe that there are policies that can speed up a recovery that has proved even slower than that which followed the Great Depression of the 1930s.
After the chancellor has spoken on Wednesday, the panel will judge whether the budget will make a difference.
Mark Littlewood, the director general of the Institute for Economic Affairs, believes it is time for the chancellor to drop his safety first approach. Deep cuts in public spending are needed to provide scope for the tax cuts that will get Britain moving and Osborne should stop being so timid.
From a different part of the political spectrum, Frances O'Grady, general secretary of the TUC, says the chancellor has cut too much too soon. She would like to see reductions in capital spending reversed, with reductions in VAT and a moratorium on welfare cuts. Economist David Blanchflower blames the chancellor for the problems facing the economy, calling him an "abject failure". Blanchflower would also like to see tax cuts, and money pumped into housebuilding.
Business would also like to see infrastructure spending increased, but is concerned about the lack of credit available to small and medium sized businesses.
Lee Hopley, chief economist of the Engineering Employers' Federation, says government action to inject more competition into small business banking would help. Simon Walker of the Institute of Directors wants to see government spending curtailed in all areas – and business provided with an environment to flourish.
Lee Hopley
Chief economist, Engineering Employers' Federation
A deficit that isn't getting smaller and an economy that isn't getting bigger is the rather constraining backdrop for the chancellor's budget.
The situation demands a relentless effort across all of government to get growth going now with measures focused on the competitiveness of our business growth engine for the medium-term.
The top three actions on HM Treasury's target list must be:
1 Directing any room for manoeuvre in the public finances towards infrastructure spending, particularly road maintenance and upgrades of congested transport links which can be started quickly.
2 Cranking up efforts to increase competition in SME banking with a three-month review of all options that could deliver more diversity and choice for borrowers.
3 A commitment to route apprenticeship funding through employers to finally create a proper market in training.
Frances O'Grady
General Secretary, TUC
The Chancellor should acknowledge that austerity has failed. Even his coalition partners now recognise the folly of capital spending cuts, with budgets down by over £20bn on pre-2010 levels.
An immediate boost would improve short-term growth prospects and long-term competitiveness. Rather than tightening the living standards squeeze we need government to help get money into people's pockets. Cutting VAT and reversing damaging benefit freezes would be a good first step.
We also need to improve access to finance for struggling small and medium sized businesses. A properly capitalised business bank with borrowing powers is urgently needed.
Simon Walker
Director General Institute of Directors
George Osborne faces demands for pet projects, special treatment and tinkering on all sides. His poll ratings have fallen significantly since last year's budget. But he must ignore these distractions and stick to his guns.
Successful Chancellors do not become so by giving in to special pleading, or chasing the opinion polls – they succeed by setting a course and doggedly pursuing it.
As painful as it may be, austerity is the only option for bloated, debt-ridden British finances. I hope the Chancellor's budget will see him steadfastly deliver a reminder to each and every branch of government to not only save money but to seek out further ways to reduce the costs of doing business in the UK.
British business has world-beating reserves of experience and talent. George Osborne must set us free to innovate, experiment and attract investment – Government cannot create growth, but it can let it flourish.
David Blanchflower
Professor of Economics, Dartmouth College. Former MPC member
Over the last year the deficit has increased, the economy has flatlined and the AAA credit rating has been lost. Animal spirits remain worryingly low and it looks like we are headed into triple-dip recession. Osborne is directly responsible for the slowest recovery since the nineteenth century and needs to apologise to the British people for his abject failure.
Reckless and misguided austerity has failed miserably as many of us predicted it would. A fiddling at the edges Budget won't do.
The basic rate of income tax should be cut by 2% along with a 5% cut in VAT alongside a major boost spending on the infrastructure, primarily on housebuilding. But he won't do it.
Mark Littlewood
Director general, Institute of Economic Affairs
The chancellor needs to create the fiscal room for substantial and meaningful tax cuts. His deficit reduction plan is veeringly worryingly off course not because it is too radical, but because it is too modest.
He needs to reduce public spending further to allow the basic income tax threshold to be raised to about £12,000, to ensure the 40p rate does not apply to those on middling incomes and to abolish the 45p additional rate altogether.
Tobacco and alcohol duties, which hit the poor disproportionately, should be frozen or reduced. Sadly, we are likely to be presented with an unimaginative and insignificant budget, which will do little to promote the economic growth the UK so badly needs.