The NIESR blog is a forum for Institute research staff to provide an informed, independent view on current economic issues and recent NIESR research. The views expressed here are those of the authors, and are not necessarily those of the Institute.
[This article was published on March 14th on the Guardian's Comment is Free.]
[updated 8am 14 March with additional section on QE, at end]
According to the FT (£) the Chancellor plans to issue an “Osborne bond” – a 100-year debt issue or even a perpetual gilt that never matures – to "to lock in the benefits of Britain’s low borrowing costs, which he claims reflect market confidence in his fiscal plans."
One of the best things about working on social policy in the UK is the depth and richness of the data, especially survey, data, that we have about British society. We may lack the comprehensive population register of, say, Sweden, but to compensate we have what I suspect is an unparalleled variety of topic-specific social surveys, from the British Crime Survey to the Workplace and Employment Relations Survey.
Last week I wrote here that the debate on work experience seemed almost entirely divorced from the evidence of whether work experience actually improved the employment opportunities of jobless young people. I pointed out that, when Iain Duncan Smith and Chris Grayling argue that around half of those on the scheme leave benefits within 13 weeks, this in itself tells us nothing about the success of the programme, since many would have left benefits without the scheme.
FT education correspondent and part-time data nerd Chris Cook published a fascinating analysis of the Oxford admission process here. The point was to explain why pupils in state schools - especially, of course, those in poor areas - are far less likely than independent school pupils to gain admission to Oxford. It did this by breaking down the disparity in actual admission probabilities into three stages of the process:
Today's migration figures show that long term international migration to the UK remains at historically high levels. Even for those who, like most mainstream economists, think that the evidence is pretty strong that immigration generally has a positive impact on the UK economy, it is reasonable to ask what the impact of the resulting rapid demographic change will be on public services; in particular education, where the impa
[Updated 22/2 at 8pm with new analysis and chart from Inclusion].
How would you describe an unemployed single mother, with moderate depression, who can't afford new shoes for her children, and whose roof is leaking? The Prime Minister calls her a "neighbour from hell", and argues that she, and people like her, are part of a "culture of disruption and irresponsibility."
Yesterday I wrote about Moody's decision to put the UK's credit rating on "negative outlook" - and why we should pay no attention at all. What we should be worrying about is today's unemployment figures; but unfortunately there is no sign that concern will translate into meaningful action.
The reaction of politicians to Moody's decision to put the UK's AAA rating on "negative outlook" was predictable - and predictably tendentious. The Chancellor described it as "proof that, in the current global situation, Britain cannot waver from dealing with its debts" while the Shadow Chancellor said it was a "significant warning."
Our latest forecast is published today: here are the highlights.
The World Economy
• Our baseline forecast is for global growth of 3.5 per cent in 2012. Growth will accelerate to 4 per cent in 2013, representing a downward revision of about ½ percentage point in each year compared to our last forecast.
On Monday, Toby Young came up with an interesting, if flawed, calculation:
As well as our regular UK and world economy forecast, this issue contains:
a discussion of Scotland's fiscal and currency choices; Angus Armstrong concludes that an independent Scotland is likely to find the implicit constraints on economic policy, especially fiscal policy, are even more restrictive than the explicit ones it faces as a full part of the UK.
Our chart on the historical experience of recessions and recoveries has got a lot of attention. But it's largely descriptive. For the current UK economic policy debate, I think this one is far more important (click to enlarge):
On Sunday, David Smith described me as “a former Cabinet Office economist who has taken the institute [NIESR] back to its Keynesian roots”. Then on Wednesday, Nadhim Zahawi MP talked of “Keynesians such as [Ed Balls] and bodies such as the NIESR”. This prompted a couple of thoughts. What do they mean? And am I, in fact, a Keynesian?
[Note: this is now slightly out of date. An updated version is here.]
The IMF, now under new management, is being increasingly vocal in saying that countries which can afford to do so should be slowing the pace of fiscal adjustment, and that failure to do so will damage growth. They've used some strong language again today, saying:
[updated to reflect David's response, below]