Friday, 21 September 2012

"People aren't interested in graphs": Chris Skidmore's response to my review of "Britannia Unchained"

In an interview with the Spectator's Isabel Hardman, Chris Skidmore MP has responded to my New Statesman review of Britannia Unchained, his book with fellow MPs Kwasi Kwarteng, Priti Patel, Dominic Raab and Liz Truss . She quotes his response:
‘Well, it’s a 116-page book, there’s 433 footnotes to it. I go back to the point about data, there’s statistics, it can be backed up. The point, the broader point is that Jonathan Portes and the NIESR, you know, this is the problem we have with political discourse is that as politicians we want to get across a message and I think he was critical about it – I don’t know how well NIESR pamphlets sell, but people aren’t interested in looking at medians and graphs. We have a duty to try and broaden that message outside of the think tank zone.’

Thursday, 20 September 2012

What explains low long-term interest rates: article for Liberal Democrat Voice

[This article was originally published in Liberal Democrat Voice here in response to a specific request to comment on the texts reproduced below. I have made many of the arguments below in previous blogposts, so regular readers may not find much new, but for others it may be a useful summary]. 

As the head of an independent economic research institute, it's not my job to attend the Liberal Democrat conference (or indeed that of any other party).  But, following up an FT article here, I was asked to comment on the text of a motion which argues that:

"Conference recognises that the difficult decisions taken by the Coalition Government have ensured the credibility of the UK government’s position in the financial markets allowing the UK to borrow at record low rates"

and on an amendment:

"Conference also notes that it would be a mistake to attribute record low public sector borrowing costs to accelerated fiscal consolidation rather than to a flight to relative safety."

Wednesday, 19 September 2012

Lazy Brits 2: Attack of the Zombies

[Starring Toby Young and Daniel Hannan MEP (title roles), Daniel Knowles and Chris Cook (data geeks), and Dr. Anna Hedge (punchline writer)]

As I hope is clear from the title, this is a nerdy post about statistics and research.  In his Sun column on Sunday, Toby Young said:
As [Daniel] Hannan points out in his book, Britain is the seventh largest economy in the world, the fourth largest military power and the fourth largest exporter.
The last point looked odd; surely the UK exports less than any of China, Germany, the US and Japan?  So I questioned it, via twitter.   First, Mr Hannan said:: "It is both true and surprising"; then, when I said that I didn't think it could possibly be right, he pointed rather vaguely to one of "the IMF, OECD, CIA Factbook".

Sunday, 16 September 2012

Sterling: my part in its downfall

[this post was published September 17, 2012 in Juncture, the journal of the Institute for Public Policy Research]

The economic and political history of the UK's ill-fated experiment with the Exchange Rate Mechanism (ERM) has been picked over many times, and the broad outlines of the story are well known (for a range of well-informed views, see here). So this is more of a personal recollection of how it felt at the time.

Wednesday, 12 September 2012

Debt, deficits and the fiscal framework

It has been widely reported that the government is considering abandoning the second half of its fiscal mandate - that debt should be falling as a percentage of GDP in 2015-16.  My view is that the short term economic impacts of this are limited.  It's not really news; NIESR has been saying for well over a year that this target was unlikely to be met.  What deficit reduction we've seen so far - largely achieved through cutting investment - hasn't exactly gone according to plan.  Nor should we worry about the markets - they certainly haven't reacted yet and I doubt they will.  As for the ratings agencies, any policymaker who pays them the slightest attention shouldn't be allowed near economic decision-making. 

Friday, 7 September 2012

Chris Giles and the "NIESR chart"

Today we published our latest monthly GDP estimates, and alongside that our chart showing the path of recession and recovery in this and previous downturns.  Chris Giles has responded with a critique, pointing out that if you look at employment rather than output the picture is very different.  He's quite right; but, as he says, many others (including me) have made this point before.   Having made this simple point, though, he then becomes somewhat hyperbolic, arguing that:
"NIESR is doing the country a huge disservice in continuing to publish the NIESR chart alone"

Wednesday, 5 September 2012

Things could and should be better

[This note was prepared for the Policy Network economy conference, "The quest for growth".] 

The UK economy has many underlying strengths and things could and should be better. If only policymakers would act
There is plenty of spare capacity in the UK economy. The Office for Budget Responsibility’s (OBR) estimate of the "output gap" (a little over 2 percent) is unrealistically low; both we at NIESR and the International Monetary Fund (IMF) think it is higher (around 4 percent). And we may well be too pessimistic.
Indeed, even with an improving labour market, unemployment is still nearly a million higher than official estimates of the "structural" rate (the NAIRU), while on the OBR's forecasts (which are likely to be too optimistic on growth in the short term, and too pessimistic on supply potential) unemployment will remain well over the NAIRU, and output well below potential, for years to come.