Britain is more optimistic about Brexit than gloomy forecasts suggest
The International Monetary Fund (IMF) is up to its usual tricks. Last week, it predicted a two-year recession in the UK in the event of a no-deal Brexit. Even in the main forecast, involving a mild Brexit, GDP was projected to grow by only 1.2 per cent this year and 1.4 per cent in 2020. […]
A ray of light in these dark days: Living standards have risen far more than we think
The media seems full of gloom at the moment. Chaos over Brexit, Saudi Arabia, potential nuclear escalation between the US and Russia – you name it, people are worried about it. A ray of light is shone – an apt phrase as you will see – by the work of Bill Nordhaus, a Yale economist […]
Cautious corporates sitting on hoards of cash are to blame for our slow recovery
The slow recovery since the financial crisis remains a dominant issue in both political and economic debate. The economy has definitely revived since 2009, the depth of the recession, in both Britain and America. The average annual growth in real GDP has been very similar, at 2.0 and 2.1 per cent respectively. This is much […]
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 […]
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 […]
Why the economic picture tends to be rosier than initial estimates suggest
One of the surprises of last week was the Office for National Statistics (ONS) estimate of economic growth in the second quarter of 2016, the period from April to the end of June. In the run up to Brexit, the economy expanded by 0.6 per cent on the first quarter of the year. This was […]
Why austerity must be the order of the day for May’s chancellor
On the face of it, the Brexiteers have a bit of explaining to do. A week before the vote, Boris Johnson dismissed fears about the value of sterling, and accused the governor of the Bank of England of “talking the economy down”. Yet the economy does seem to have stalled, property funds have had to […]
The coming explosion in natural debt is a serious risk to the economy
Martin Feldstein of Harvard is an economist who should always be taken seriously. Writing in 1997 about the forthcoming introduction of the euro, for example, he argued that “the adverse economic effects of a single currency on unemployment would outweigh any potential gains from trade flows”. He went on to predict that the euro was […]