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.
In the week before the Spring budget, we are all supposed to get excited about the odd change in tax rates or the TV license fee. And worry about the excise duties on various viscous hydrocarbons. In fact, what we ought to be worried about will probably mostly be missed by commentators: that is whether the government is meeting its obligation to reduce risk.
The problem of teacher shortages is rarely out of the news. Only this week the Education Select Committee concluded that the government is failing to take adequate measures to tackle "significant teacher shortages" in England. Gaps in the classroom are being filled by supply teachers, some hired by agencies. Yet, while agency staff usage and spending in the NHS frequently attract headlines in the national media, much less attention is paid to the spiralling costs of agency supply teachers in England’s state schools.
It has been said many times that the NHS is at breaking point. Talk of bed shortages, wasted resources, understaffing and missed targets saturate the media. A Government Adviser has even said recently that hospitals are in a ‘state of war’. High rates of use of agency workers are seen as a symptom of a sick NHS but the reasons for their spiralling use are poorly understood. New research by the National Institute of Economic and Social Research (NIESR) set out to explain why agency workers seem to be keeping the NHS alive. The research diagnoses the root causes of high agency spending, revealing that agency working is only the symptom of a much larger, chronic problem around NHS staffing.
There is a growing sense that globalisation, by equalising the international price for labour and for capital, has acted to reduce both real wages and real interest rates – the former means that labour earns less but the latter tends to inflate asset prices. This wedge in the return to capital and labour may help us understand why income and wealth inequality has increased in the recent past.
Last year, I was invited to present a keynote address to the 20th annual conference of the FMM Research Network on Macroeconomics and Macroeconomic Policies, “Towards Pluralism in Macroeconomics”, held in Berlin on October 20th – 22nd.
The February 2017 National Institute Economic Review discusses the possible consequences for the US economy of the significant changes in economic policy promised by the new US administration.
In yesterday’s blog post we discussed findings from our research on older workers and the workplace. Our focus was on the experiences of older workers, but today we consider the employer perspective. The fact that older individuals are remaining in work is good news for the individuals concerned, since working is associated with higher incomes and better health. It is also good for the Exchequer, increasing the tax take. But is it good for employers?
More and more older individuals are working. It’s good news that more people are working longer, with potential benefits for both individuals and the economy. But employment rates still drop notably when people reach their 50s and 60s.
Rules have become an increasingly prominent – even defining – feature of EU economic governance as a result of the various reforms undertaken to resolve the euro crisis. There are now rules on fiscal deficits and debt levels, set out in the Stability and Growth Pact (SGP), and an EU Directive required Member States to enshrine fiscal rules in their national legal order.
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.
Theresa May's 12 point plan for negotiating with the EU included two key announcements regarding trade: the UK will not seek membership of the single market, and the UK wishes to abandon the EU’s common external tariff, in order to be free to negotiate trade agreements with third countries.
This blog provides a range of projected impacts on UK trade of these policies.
How does a government reduce its public debt burden relative to national income, which is what I mean by a fiscal consolidation? There are a number of obvious instruments that might bear immediate fruit: reduce the flow of government deficits by increasing taxes or reducing government expenditure or to develop expenditures that increase output by more than the increase in the deficit. The latter is of course the search for the holy grail of a multiplier greater than one and the former is often termed 'austerity'.
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
Outside it is rather miserable. It is wet, windy and dark. And Blue Monday looms. But at the Institute January is a forecast month, so we are kept warm by the comfortable whirring of economists running models, assessing data, understanding deviations of outcomes from expectations and applying dollops of judgement.
In a Keynesian view of the world, the joint actions of monetary and fiscal policy set the level of overall demand in the economy.
Christmas is here and being marked in the British way by excessive consumption of food and drink, harvested, processed, delivered and served thanks to the labour of migrant workers.
We are asked to consider what has caused this year's revolt against the conventional wisdom that liberal capitalism is the best way to guarantee economic welfare. It is too early to account for all the reasons. But a primary candidate is the continuing inability of the economy to generate median real wage growth
After the UK referendum and the US presidential election result, there were significant movements in asset prices. Notably in the UK, the exchange rate fell by some 15% and, surprisingly in the immediate aftermath, term premia also fell by some 20Bp. But following the recent Italian referendum result and the announcement of the resignation of the Italian Prime Minister on December 4, although Italian term premia have been volatile, there has been little overall change in premia. For example, the two day change in term premia from 5 to 7 December was around 2Bp. I suggest that one reason for the relative stability is the ECB's QE programme which is providing support for bond prices with respect to changes in risk.
Economic forecasters ought to be thankful for pollsters otherwise they might look very bad indeed. The story often told is that a recession was forecast in the event of a vote to leave the European Union and because there has been no recession, economic forecasters have let us down. This story is not quite the truth
As far back as August I predicted that Brexit (among other factors) would lead to a sharp fall in EU migration. There are tentative - but only that - signs of that in today’s data – although it’s very early days yet.