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Dr Angus Armstrong

Posted: 28 March, 2017 - 17:36

Article 50 may lead to a decisive fork in the road for the UK. The final Brexit agreement “must take account of the framework for its [the UK’s] future relationship with the EU.” Therefore, the government has two years, realistically eighteen months, to redefine our international relationships. These relationships have a direct correspondence on our economy, creating winners and losers. The government may have to choose between two very different paths.

Dr Angus Armstrong

Posted: 14 March, 2017 - 08:51

Brexit need not have led to a second Scottish referendum. But the UK Government’s policy of ever harder Brexit, without so much as a vote, raises issues of political legitimacy north of the border. The Scottish Government faces daunting economic hurdles to convince its electorate. But if we have learned one thing over the last year, the feeling of exclusion can override economic logic.

Dr Angus Armstrong

Posted: 30 January, 2017 - 10:29

A basic principle in economics is that there is no free lunch. To get something we want, we have to give up something we like. The Prime Minister made crystal clear in her Lancaster House speech last week that Brexit is about restoring parliamentary sovereignty. What she failed to make clear was what we will be giving up.

Dr Angus Armstrong

Posted: 16 January, 2017 - 18:11

At noon today, the Prime Minister will set-out the government’s strategy for Brexit. Mrs May will no doubt repeat that Brexit means Brexit. But the important question is what will be the UK’s future economic arrangement with the EU? The Prime Minister will try and keep her options open, but the trade-offs involved seem to make a ‘Hard Brexit’ inevitable 

Dr Angus Armstrong

Posted: 23 November, 2016 - 18:56

The change of Chancellors has brought change in direction for fiscal policy. Ex-Chancellor Osborne argued that given the level of debt, austerity and a fiscal straight-jacket were necessary to maintain economic and financial confidence. Chancellor Hammond faces even higher debt levels and more uncertainty, but chose to reduce austerity and opt for a non-binding fiscal rule.

Dr Angus Armstrong

Posted: 13 November, 2016 - 12:52

Since Donald Trump’s victory last week, the odds of Marine Le Pen (National Front) winning the French Presidential election in May have shortened to 2:1. That is a 33% chance compared to a 56% chance for the frontrunner and establishment candidate Alain Juppe.

Le Pen is committed to holding a French referendum on EU membership (‘Frexit’) which would have huge and unpredictable consequences for the EU. It is difficult to see how the other 27 EU nations would have the time, inclination or incentive to accommodate the UK while faced with a threat to its very own existence.

Dr Angus Armstrong

Posted: 14 October, 2016 - 18:21

Almost half a century ago, Prime Minister Harold Wilson told the country:  "From now the pound abroad is worth 14% or so less in terms of other currencies. It does not mean, of course, that the pound here in Britain, in your pocket or purse or in your bank, has been devalued.”

Dr Angus Armstrong

Posted: 2 August, 2016 - 22:16

One reason for the UK leaving the EU was the promise of ‘taking back control’ of trade policy. The UK would give up its influence and vote on EU policies in return for the freedom to negotiate its own trade agreements with countries around the world.

Dr Angus Armstrong

Posted: 5 July, 2016 - 17:04

The UK’s decision to leave the EU is a watershed event. It may bring to an end the free movement of labour and limit the free trade of goods and services between the UK and EU. This follows hot on the heels of the fragmentation of international finance in the aftermath of the global financial crisis. How world leaders respond will determine whether Brexit is a set-back to globalisation, or part of deeper retrenchment.

Dr Angus Armstrong

Posted: 24 June, 2016 - 12:04

Uncertainty has gripped financial markets in the UK and around the world. The immediate response this morning has been unprecedented in the post Bretton Woods era. In the space of six hours sterling has fallen around 10 per cent against the dollar to the lowest level for 31 years. Stock market futures indicate that the equity markets will fall by around 10%. Further gyrations are expected over the coming days and weeks as market participants grapple with the implications of the results. The response so far reflects a weaker expected economic outlook at home and abroad.

Dr Katerina Lisenkova

Dr Angus Armstrong

Posted: 14 June, 2016 - 14:43

In our recent report here we assessed a potential effect of Brexit on low income families. In particular, the potential changes to welfare payments that might follow after Brexit. We combined projected changes in national income with the spirit of the Government’s Fiscal Charter. Our results suggest that the effect on the incomes of the low income families could be substantial. 

Dr Angus Armstrong

Posted: 6 June, 2016 - 08:47

If you boiled this referendum down to what is really being asked it is whether to stay in the Single Market, or leave and negotiate a Free Trade Agreement with the EU.

The Single Market and a Free Trade Agreement sound pretty much like the same thing – they both allow us to trade. But, in fact, they are quite different.

The Single Market is about creating a large and level playing field. The idea goes back 250 years to the great Adam Smith who said that productivity, and therefore our standard of living, depends on the size of the market.

Dr Angus Armstrong

Posted: 22 February, 2016 - 02:21

Within the rules of the club, Prime Minister Cameron achieved as much as could be expected on Economic Governance from the European Council negotiations. But the gain in flexibility may turn out to be rather less significant in practice.

The agreement recognises two quite different visions for the European Union. Eurozone nations seek closer economic and political union, while UK negotiators wish to safeguard its current economic and political sovereignty.

Dr Angus Armstrong

Posted: 3 February, 2016 - 13:17

The Economic Governance reforms sought by the Prime Minister seem anodyne next to red cards and emergency breaks. Yet the issues raised in the negotiations go right to the heart of the UK and EU problem. The immediate aim is to pacify Euro sceptics, but the coherence of the arrangements will eventually be judged on financial markets.

Dr Angus Armstrong

Posted: 25 November, 2015 - 16:13

The Chancellor has announced £7bn of housing market subsidies to encourage property developers (including local authorities and housing associations) to deliver up to 400,000 additional affordable homes over the next five years. The twist is that the new homes will be aimed at the owner occupation rather than rental market. This is clearly good news for would-be homeowners and developers. But does it make long-term sense for the country?

Dr Monique Ebell

Dr Angus Armstrong

Posted: 14 July, 2015 - 08:47

Only two hours after the Scottish referendum result was declared, Prime Minister Cameron announced that “just as Scotland will vote separately in a Scottish parliament on their issues of tax, spending and welfare, so too England as well as Wales and Northern Ireland should be able to vote on these issues”.[1]

Dr Angus Armstrong

Posted: 8 July, 2015 - 17:47

The Summer Budget contained two substantive housing market related policies. First, the effective raising of the inheritance tax threshold for property by £175,000 per person, meaning a couple can bequeath their family home to their children or grandchildren without any tax due up to £1,000,000 (after the mortgage). Second, buy to let landlords who claim tax relief on their mortgage interest payments will only be able to do so at the basic rate of tax from 2017 (phased in over four years). Working out the net effect has some subtle twists.

Dr Angus Armstrong

Posted: 3 July, 2015 - 15:54

Events unfolding in the eurozone matter for the UK's referendum. The euro is the main currency of the EU: only two of the twenty eight member nations have official opt-out clauses from joining the single currency. What happens to the euro cannot be separated from the EU, and therefore the choice facing the UK electorate.

Dr Angus Armstrong

Posted: 23 June, 2015 - 08:59

Scotland’s future borrowing power is the most important issue in the devolution debate. While on the surface a dry subject, consider that differences in US state finances were central in the escalation to civil war and Europe’s current tragedy arises from sub-central borrowing powers within a monetary union.[1] The IMF recently published this paper summarising recent evidence of moral hazard which generally accompanies sub-central borrowing powers.  

Dr Angus Armstrong

Posted: 26 May, 2015 - 08:53

It is often said that a camel is a horse designed by committee. Their humps and famous bad tempers are supposed to reflect the inconsistent compromises often made on committees. With financial services the compromises may be less obvious than camels’ humps, but the consequences can be much more serious.