Does the productivity gap actually exist?
Whoever wins the election tomorrow will have to grapple with what appears to be a fundamental economic problem. Estimated productivity growth in the UK is virtually at a standstill. The standard definition of productivity is the average output per employee across the economy as a whole, after adjusting output for inflation – or “real” output, […]
Don’t believe the myths: Capitalism has performed well since the financial crisis
Ten years ago, the financial crisis began to grip the Western economies. During the course of 2007, GDP growth slowed markedly everywhere. By the end of 2008, output was in free fall. A key theme in economic commentary is the sluggishness of the subsequent recovery of the developed economies. The picture is not quite as […]
Government debt addiction means you can be sure of one thing: Stealth taxes will rise
Elections create uncertainty. But we can be sure of one thing. Regardless of the result, during the course of the next Parliament, stealth taxes will rise. This week, we have a sharp rise in speeding fines. Even doing between 31 and 40mph in a 30mph zone can now land you with a penalty of 50 […]
Britain’s debt dilemma: Not too high, not too low or the UK economy risks disaster
The Bank of England Financial Policy Committee (FPC) has signalled that it has become worried again about debt. Its specific focus is households. Consumer credit, for example, grew by 10 per cent during 2016, far faster than the economy as a whole. A lot of household debt is in the form of a mortgage, so there is […]
There’s substance to the Trump team’s trade critique of Germany and the Eurozone
President Trump’s administration has made many criticisms of Germany. One of the more important was by his top trade advisor, Peter Nabarro. He accused the Germans of using a “grossly undervalued” Euro to “exploit” its trading relationship with America. The complaint that when the Euro was formed the Deutschmark was too low relative to the […]
Claims that a low tax, low regulation UK would be a disaster are rubbish
Dame Minouche Shafik, Deputy Governor of the Bank of England, is leaving to become Director of the London School of Economics. Last weekend, she gave her final interview wearing her Bank hat. Shafik issued what was described in the media as a “thinly veiled warning” to the Chancellor, Phillip Hammond. She stated that it was […]
What Dirty Harry tells us about economic forecasters’ Michael Fish moment
Economic forecasters are in the dock. Last week, none other than the chief economist of the Bank of England, Andy Haldane, was confessing the crimes of the profession. The failure to predict the financial crisis was, Haldane said, economic forecasting’s “Michael Fish” moment. Thirty years ago, the BBC weatherman predicted that the UK would avoid […]
The death of cash, the rise of trade unions and other eclectic 2017 predictions
It’s certainly been an eventful year. But rather than dwell on the past, what sort of things can we expect in 2017? Here are a few eclectic predictions. Sweden may become the world’s first cashless economy. Notes and coins are already fast disappearing as a means of payment, and retailers are legally entitled to refuse to accept […]
Rampant corruption – not just the euro – has doomed Italy to stagnation
So farewell then, Matteo Renzi! The resignation of the Italian Prime Minister after his heavy defeat in Sunday’s referendum on constitutional reform has created turmoil. Fears have been resurrected about the stability of the Italian banking system, and even the possibility of Italy leaving the euro has been raised. But the problems of the Italian […]
The OBR shouldn’t be expected to forecast so far into the future
Economic forecasts have become a political hot potato. The Office for Budget Responsibility’s (OBR) predictions, presented as part of the chancellor’s Autumn Statement, have put the government under pressure. The OBR has revised down its forecast for GDP growth over the next four years by 1.4 percentage points. The real controversy is that their gloomy […]
