Whatever Reeves announces, Britain is still paying for lockdown
Regardless of the precise measures brought in by the Chancellor, Rachel Reeves, in the budget to be announced today, a fearful spectre haunts the public finances of the UK. Namely, the spectre of the costs of lockdown. In the calendar years 2017-19, immediately before the pandemic, the UK government borrowed around £50 billion each year. […]
My advice to Rachel Reeves? Learn how to spin a yarn
Macroeconomists spend much of their lives immersed in highly mathematical models of the economy. But at the top of the profession there is increasing interest in a much older tradition of what really drives the economy. Namely narratives. The story which people believe can be the key determinant of behaviour. Everyday commentary on the economy […]
Nobel Prize winners’ message is clear: excessive taxation inhibits growth
This year’s award for the Nobel Prize in economics, announced a couple of weeks ago, has not attracted much media attention. But the recipients have a lot to say about the central aim of the government’s economic policy. Namely, how to make the UK more innovative and generate economic growth. Joel Mokyr, an economic historian […]
Rational consumers reject cost of climate change
The headlines are full of bad news for Kier Starmer. But an important story last week was bad news for his Cabinet colleague, the Energy Secretary Ed Miliband. Miliband is well known for his devotion to Net Zero. Unfortunately for him, the electorate seem increasingly less enthusiastic about the concept. The Times newspaper carried detailed […]
Protecting against cyber attacks means tackling rational inattention
Cybersecurity, highlighted by recent attacks on the Co-op and Marks & Spencer, is not just a technical challenge but also a human and economic one, says Paul Ormerod Cyber security has featured prominently in the media, following the attacks on the Co-op and Marks and Spencer. The Co-op has recovered rather the better of the […]
What Rachel Reeves can learn from Geoffrey Howe
In 1981, Geoffrey Howe defied Keynesian orthodoxy by tightening fiscal policy during a recession – and completely changed the narrative about the British economy. Reeves must do the same, but all she offers is doom and gloom, says Paul Ormerod The UK economy is either already in or very close to a recession. Despite Rachel […]
UK universities should focus on excellence, not DEI
The UK university sector won’t solve it’s financial problems by prioritising diversity goals over research quality, says Paul Ormerod The university sector in the UK often seems to live in a dream world. Research England, for example, is proposing to order them to “robustly” promote diversity and inclusion in order to qualify for access to […]
Is choosing not to work a rational response to economic conditions?
Economic theory teaches that people will make the optimal allocation of their time between work and leisure, and if they can’t earn why bother to work? That’s a choice neither individuals, nor the country can afford, says Paul Ormerod The rise in worklessness is acknowledged across the political spectrum to be a serious problem. It […]
If the ONS can’t measure productivity, how are we meant to improve it?
The ONS’s shortcomings are far from trivial, its bad maths is holding back the UK economy, writes Paul Ormerod The Office for National Statistics (ONS) has come in for a lot of criticism for the accuracy of its labour market data. More specifically, its estimates of how many people there are in employment have become less […]
Method in Trump’s madness? What economic theory teaches us about tariffs
Trump’s tariffs have sent the world into a frenzy but there could be method yet. Economic theory shows that tariffs can in some cases reduce prices, writes Paul Ormerod The reactions to President Trump’s tariffs have been frenzied, to say the least. The headline on many of the stories about them might well have read “The […]
