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When I'm asked in interview or articles to sum up concisely why I think the government should change course on fiscal policy, I usually say something like this:
[This article originally appeared in the Independent here].
My Guardian article, here.
Much of the discussion about today's GDP figures has focused on the "surprise" fall in construction, as if this had somehow come out of nowhere and was nothing to do with government policy. And perhaps the figures will be revised. But more broadly, it is hardly surprising that the construction industry is having a hard time when the government has taken a deliberate decision to slash public sector investment - down 25% last year, as Tuesday's ONS figures showed.
[This piece appeared first in the Independent here]
[Figures in this paragraph, and chart, updated April 19, 2012]
As recently as 2008 there were fewer than 6,000 18-24 year olds who had been on Jobseekers' Allowance for more than a year. That number is now 55,000 - nearly ten times as many. This is not just the recession and its aftermath: after falling back somewhat in the year to May 2011, the number has more than tripled, as shown in the chart below. The same is true for the proportion of claimants who have been claiming for more than a year.
[Updated 11 April 2012 with this preface]
I still seem to have difficulty getting across the very simple point that the historically low level of long-term interest rates in the UK (gilt yields) reflects primarily protracted economic weakness rather than, as the government persists in asserting, confidence in the government's economic strategy. Maybe this chart will do the trick:
Last week representatives of the European Commission came to see me and colleagues at NIESR to discuss the economic prospects for the UK. We had a sensible discussion, during which time I expressed my view that slowing fiscal consolidation would boost growth and employment without posing any significant risk to fiscal credibility, and that in this respect the Budget was a missed opportunity.
I appeared before the Treasury Committee today to discuss the Budget. As usual, we were asked about the government's macroeconomic strategy, and the case for a change of course.
NIESR's response to the Budget, and commentary on the OBR's forecasts, is here.
The announcement that the government is considering "privatising" the national road network is potentially an important step that could deliver major economic and environmental benefits - benefits that go well beyond any benefit to the public finances. But whether those benefits are realised depends crucially on how "privatisation" actually works.
[Updated April 2]
Fitch have now followed Moody's in putting the UK's credit rating on negative watch, with just as little excuse. This may be perceived as somewhat embarrassing for the government, coming as it does immediately after the Chancellor announced plans to take advantage of "market confidence" in the UK to issue a 100 year bond or even a perpetual gilt.