Share to Twitter Share to Linkedin By Linda Yueh, Adjunct Professor of Economics The UK’s most recent Autumn Statement had three stated objectives: stability, growth and a plan for public services. As I said during the evidence session in front of the Treasury Committee of the House of Commons earlier this week, it achieved the first but the second and third require more work. The reaction of financial markets confirmed that the new UK Chancellor in his first budget has managed to restore stability. Borrowing costs were always going to rise due to the bank rate increasing as a result of inflation. But, the spike in yields in the gilt market seen after the previous Chancellor’s mini Budget was not repeated. This is a fundamental building block in setting out a growth strategy for the UK economy and addressing the challenges around public services. Stabilising borrowing costs affects the size of the numerator in the debt-to-GDP ratio, but the … [Read more...] about UK’s Next Focus Needs To Be On Economic Growth
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Share to Twitter Share to Linkedin As COP 27 rounds up with some of the speeches and soundbites sounding very similar to years gone by, there's a palpable sense of frustration in the air . Judging by all the bottoms superglued to motorways and orange paint splashed on masterpieces in the galleries of Europe, that frustration is playing out in arrestable offences. In the UK, Italy and Germany, eco-warriors have been out in force grabbing news headlines and, in some cases, causing motorway accidents. And all of this with support from Greta Thunberg , who last year said climate activism is fine - “as long as no one gets hurt.” Just Stop Oil feels it is getting its campaign right, and that it is aligned with some of the world’s best democratic traditions. After all, as they point out, Emily Pankhurst handcuffed herself to the metal railings outside of the Prime Minister’s office to get the vote for women; Her movement over 100 years ago also smashed … [Read more...] about Are The Superglue Antics A Sign We Need To Unstick Our Regulatory Thinking?
Liz Truss The precipitous fall of former UK Prime Minister Liz Truss’s government has been widely credited to the objective discipline of financial markets. Her misguided policies, the logic goes, elicited such a negative reaction that she had no choice but to backtrack and resign. I see a very different story. Markets didn’t oust Truss, the Bank of England did — through poor financial regulation and highly subjective crisis management. Truss won the leadership of the Conservative Party, which the UK electorate had voted into power, by promising a range of deep tax cuts and government spending increases. Whatever one might think of her policies, they were her mandate. I agree with the many observers who expected them to lead to higher inflation, higher interest rates and quite possibly higher unemployment. But such adverse outcomes take months and years to play out. Her government fell in a matter of weeks. How could this happen? The common wisdom is that financial markets … [Read more...] about Markets didn’t oust Truss, the Bank of England did