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.
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[Note: this is now slightly out of date.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]
I have been writing quite a lot about immigration recently - here and here. But there’s an unfortunate tendency for dialogues on this topic (oral or in response to my columns) to go something like this: I, or other economists who work in this area, say that the empirical evidence suggests that immigration has little or no impact on employment or unemp
I am early in the office today - 7.30 am - and the cleaners are just finishing up. Not surprisingly, they clearly were not born in the UK (Brazil? Romania?), and I think it is reasonable to assume (we use a reputable firm) that they are paying tax and not claiming benefits.
At the end of last year, the FT asked me and many other UK economists to answer a set of questions about likely economic developments over the coming year. They summarised the results here, but for obvious reasons didn't go into much detail (perhaps not surprisingly, the only direct quote from me was my joke in the first line of my response to question 1 - an old joke but a good one..).
Since the financial crisis, economists as a profession have come in for considerable criticism, both for failing to predict the crisis and for disagreeing violently with each other about what to do about it. As far as macroeconomics and finance go, it is difficult to dispute that there is a strong case to answer.
The impact of immigration on British workers is a matter of heated political debate. But anybody seeking light from the economics profession on this topic could be excused if they were somewhat confused by the research published over the last few days. On Monday, Migration Watch published a report highlighting the "remarkable coincidence between the rise in youth unemployment and the surge in immigration from Eastern Europe over the last eight years." Yesterday, new