Transcript Migration - WPF March 2011

UK economic policy and prospects
Jonathan Portes
June 2013
www.niesr.ac.uk
Twitter: @jdportes
Niesr.ac.uk/blog
National Institute
of Economic and
Social Research
Slowest recovery in recorded economic history
What explains UK economic underperformance?
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Fiscal policy: predictable result of premature consolidation
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Continued dysfunctionality of financial sector
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Commodity prices/imported inflation
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And of course the eurozone
-
Fortunately the labour market has come to the rescue..
Blaming the eurozone? Yes and no..
Impact of consolidation programmes on level of GDP, 2013
-2
-4
-6
-8
-10
-12
Scenario 1
Scenario 2
Euro
Area
UK
Spain
Portugal
Neths
Italy
Ireland
Greece
Germany
France
Finland
Belgium
-14
Austria
% difference from base
0
Long term damage, here and elsewhere
Short term: signs of modest improvement...
How to minimise the damage? Lots of Plans..
•
Posen: public and private investment, BIB, BoE purchases
•
NIESR: public infrastructure, NICs, reverse benefit cuts
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LSE GC: investment, skills/human capital, innovation
•
Fabians (Pryce, Weldon, Mazzucato, Portes, et al) : state banks, innovation,
immigration, inequality, etc.
•
“Hayekians”: cut spending “properly”, cut taxes
No-one left to defend “muddling through”, but that’s what we’ll get..
More public investment could boost output in both
short and long term..
Can we afford it?.
What does a (medium-term) growth strategy look like?
•
Building on successes (competition, labour market)
•
Addressing weaknesses (management, educational underperformance,
planning/housing)
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Identifying and maximising sectors of comparative advantage (HE, finance,
creative industries, business services, pharma, hi-tech manufacturing)
•
Much of this is common ground – so what are the issues/challenges?
Housing
•
Housing market contributes to number of structural problems with UK
economy:
– Financial instability
– Labour immobility
– Inequality/social immobility
•
But Help To Buy has achieved the impossible..
•
Reforms/investment needed for social housing, planning, and mortgage
finance
UK economic policy and prospects
Jonathan Portes
February 2013
www.niesr.ac.uk
Twitter: @jdportes
Blog: notthetreasuryview.blogspot.com
National Institute
of Economic and
Social Research