AN award-winning economist has attacked the austerity policies adopted by Labour and the Tories as “naive” and likened them to a kindergarten understanding of economics. At the same time Professor Steve Keen – one of the few economists to have predicted the financial meltdown – praised the SNP and the Greens.

In a recorded interview with the financial website, Keen claimed that failing to invest in growth would not generate a sustainable recovery due to high levels of private debt. Public debt, he said, was more a symptom than a cause of economic problems.

He joins other leading economic voices who have spoken out against the irresponsibility of austerity.

In recent weeks Business for Scotland and the leading Scottish economic think tank N-56 have called for an end to austerity to create economic growth. Nobel prize-winner Paul Krugman called the case for cuts “a lie”.

Keen said that the “most positive thing” he could say about the Labour and Tory view of austerity politics was: “It’s naive and childish”.

He said: “When you look at the way that they [Tories and Labour] talk about the government having to run a surplus ... you can’t think about the economy and the government’s role in the economy like a child might think about a household budget, which is all that’s being sold by politicians of both sides.”

Keen, who is head of the school of Economics, History and Politics at Kingston University in London, went on to explain how cutting public-sector spending to balance the books actually harmed growth and took money out of people’s bank accounts.

He said: “Draw a rectangle, call that the entire economy and divide it in half, with one half the government the other the public.

“If the government is going to run a surplus, which is what both Labour and the Conservatives are saying is their objective, that means the taxes the government is imposing on the public have to be greater than the spending.

‘SO what you’ve got therefore is the flow of money has to be going from the ‘public’ box to the government. For the government to run a surplus they’ve got to be taking money out of your bank accounts.

“That’s the opposite of what people think. If the government’s going to run a surplus it has to tax the people more than it spends on the people.”

Keen added that if government ran a surplus for a sustained period, it would be forced to borrow money from the banks. ‘‘What it means is that you’re going to have rising public debt, with a relatively constant GDP, rising private servicing pressure as well,” he said.

“At some point the public’s going to stop borrowing money from the banks and you’ll go into a downturn.”

“It’s a recipe for a future economic crisis.

“That, in a nutshell is why Greece and Spain and Italy and France are in the state they’re in right now,” added the economist.

“And both political parties are saying ‘we think it’s a good idea’. It’s kindergarten thinking about the economy.”

Keen went on to say that Conservative austerity or Labour austerity light would both lead to economic stagnation.

And he praised the SNP, saying: “The only ones who are close to a sensible policy are the Greens and the SNP, because they at least are talking about the dangers of the private banking sector.

“They’re seeing the banking sector as the cause of the problems, rather than a potential solution – which is still the way the Conservatives look at the banking sector and Labour in effect lean towards banking light rather than banking heavy.”

Keen’s rationale is that the Westminster-focussed parties have underestimated the vital impact of public-sector investment into the economy that would enhance growth by creating jobs and new revenues.

His remarks have been welcomed by Gordon MacIntyre-Kemp, founder and director of Business for Scotland.

He said: “Westminster’s ill-considered austerity consensus represents full financial irresponsibility.”