Nick Bosanquet in the Financial Times: projections for 2014

Each New Year the Financial Times surveys a select group of policymakers, academics and commentators to gauge views on some important questions for the economy for the coming year. Volterra associate Nick Bosanquet took part in the survey again in 2014. Take a look at Nick’s responses below:

1. Economy: To what extent will the UK maintain its recent pace of economic growth in 2014? Will households start to feel better off?

The pace of economic growth will increase to 3 per cent  driven by rising consumer confidence. There will be  a wealth effect, from rising house prices. Households will also react positively to falling  inflation rates. Once the energy price increases are over in this autumn  inflation should fall towards 1 % in 2014-15. The Bank has already underestimated the recent fall and further falls are likely. This will be helped by supply side competition as companies seek to raise market share in an expanding market. The UK will benefit from having a competitive, open economy. Oligopolies seek to raise prices in a rising market while competitive firms seek to increase market share and improve margins through unit cost reductions. We are already seeing this in the supermarkets.

2.      Sustainability: Is the recovery set fair, or will this upswing end in tears? Why?

The recovery is set fair.  By end 2014 the misery index will have fallen sharply. Upswings are brought to a halt either by rising inflation of confidence collapse. Rising inflation reflects (1) world inflation rates—the BRIC countries now have a surplus of manufactures and falling exchange rates  so their export prices will fall (2) Domestic cost pressures. These will be weak. The open labour market with high immigration together with rising activity rates  will be very important here in containing wage increases  (3) Demand pull. Here the competitive forces will work to raise supply rather than price . There is no reasons to expect confidence collapse with rising employment wealth effects for home owners , and low inflation. Households are also showing greater effort in getting value for money not lest by a 25 % reduction in energy consumption.

3. Monetary Policy: Will the Bank of England change its forward guidance in the coming year? Should it?

It should move to a regime of positive rates in 2015 to provide an incentive to save and financial discipline  for borrowers. Such a move would raise confidence as a sign of real recovery.

4.      Fiscal policy Has George Osborne’s “plan A” been vindicated by the recovery in 2013 and should the planned pace of deficit reduction continue unaltered?

There are good chances of faster debt reduction than expected as a result of rising indirect tax and stamp duty revenues. He should set a .longer term target of moving to 40 per cent of GDP  in public spending partly as a lever or a more effective public services.

5.      Labour market and productivity By the end of next year, what are we most likely to be saying about the productivity puzzle?

The private sector had a labour shortage forced on it outside London by the growth of public sector employment. We are now seeing that able people in the regions are  seeking careers in the private sector. This rebalancing is highly positive for reducing the North–South divide.

6.      Housing. To what extent does the housing market need to be restrained? If so, what policies might work?

The housing bubble exists in about 20 postcodes on 124. The house price  figures reflect the prices achieved in sales in these areas. –not the stagnation elsewhere. There has been some rise in transactions everywhere  but quite slow outside the golden 20. Even in the South East there are areas like Bedford and Hythe Kent   with many houses on sale for under £150 K and flats or under £100 K—and they are not selling. .The  current incentives should be re-orientated towards new and converted housing but in general no further action is required.

7. Scotland How would a yes vote for independence affect the Scottish economy and the rest of the UK in 2014?

There would be great  concern that a notably stable group  in the UK had taken leave of its senses. Such a vote would leave the UK on the edge of a new spiral of falling confidence. It would raise concerns about the EU referendum. This uncertainty would be the biggest threat to UK economic stability. The Yes vote would be a disaster for the UK as a whole not just for Scotland.

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t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.