Publications

Vulnerability from Debt in the Coronavirus Crisis

Publication date: 26 May 2020 | Publication type: Policy Paper | NIESR Author(s): Naisbitt, B

Abstract After a period of deleveraging following the financial crisis a decade ago, the past five years have seen private sector debt rising again in both advanced and emerging economies. Public sector indebtedness, too, is generally higher than five years ago. The increase in debt was, before...

The Economics of the UK University System in the Time of Covid-19

Publication date: 22 May 2020 | Publication type: Policy Paper | NIESR Author(s): Dolton, P

Abstract The UK University system faces its biggest challenge in 40 years as a direct result of the Covid-19 pandemic. What is the scale of the uncertainty facing universities and to what extent have the problems been exacerbated by the over-reliance on overseas student fee income to facilitate a...

NIESR CPI Tracker - May 2020

Publication date: 20 May 2020 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

Underlying Inflation Reflects Inflationary Pressure Consumer price inflation decreased by 0.7 percentage points to 0.8 per cent in the year to April 2020, as per data released by the ONS. Our new analysis of 84,990 locally collected goods and services indicates consumers benefitted from lower...

NIESR Wage Tracker - May 2020

Publication date: 19 May 2020 | Publication type: NIESR Wage Tracker | NIESR Author(s): Young, G, Sánchez Juanino, P

First Signs of Severe Labour Market Impact of Covid-19 Main Points Official labour market statistics are mainly lagging indicators and are only just beginning to show the impact of Covid-19 which started to affect the UK economy from around the middle of March. According to new ONS statistics...

May 2020 GDP Tracker

Publication date: 13 May 2020 | Publication type: NIESR GDP Tracker | NIESR Author(s): Whyte, K

Economy Contracting at Rapid Pace Main Points The ONS preliminary estimates suggest that growth declined by 2.0 per cent in the first quarter of 2020, broadly consistent with what we suggested it could be last month (figure1.) The substantive contraction in growth reflects negative contributions...

Moving Back Towards Market-Based Government Finance

Publication date: 12 May 2020 | Publication type: Policy Paper | NIESR Author(s): Allen, B | JEL Classification: E52, E58

The Federal Reserve and the Bank of England have been pursuing yield curve control in their respective government securities markets since market liquidity collapsed in the middle of March. The paper discusses the issues that arose during and after previous episodes of yield curve control,...

Summary of NIESR forecasts ahead of key Bank of England report

Publication date: 4 May 2020 | Publication type: Other | Theme: Macroeconomics

Ahead of the Bank of England’s MPC meeting and quarterly monetary policy report on Thursday, here below a summary of key points outlined in our latest analysis for the UK and global economy, available in full here. GDP is estimated to be reduced by about 30 per cent when the lockdown is in...

The Effects of Macroprudential Policy on Banks' Profitability

Despite the importance of profitability to banks’ growth and stability, there have, to our knowledge, been no studies which assess the effect of macroprudential regulation on banks’ profitability, a key aspect of the transmission of macroprudential measures. We seek to fill this lacuna with...

Brexit and impact routes through global value chains

We analyse the trade routes between the UK and EU countries. Our results show that the relative importance of the UK as a trading partner in the EU has slightly decreased. We further decompose the total value added into components that quantify the value added that is generated through direct trade...

The EU’s shrinking share in global manufacturing: a value chain decomposition analysis

The EU´s falling share in global manufacturing has fuelled concerns about an overall loss of EU competitiveness, in particular vis-à-vis China. We analyse the empirical evidence underlying these concerns by applying a newly developed decomposition technique to global input-output data spanning the...

On the relevance of global value chains and the intra-European division of labour

This article first introduces the concept, the rationale, the causes and the genesis of global value chains from a worldwide perspective in the form of a brief overview. In the second empirical section, a closer look is taken at the intermediate trade integration in the EU. In particular, the...

Value chains and domestic competitiveness

Publication date: 29 Apr 2020 | Publication type: National Institute Economic Review | Theme: Macroeconomics | External Author(s): Gasiorek, M, Smith, A, Tamberi, N | JEL Classification: F6, F14, F15, F17; F42 | Journal: National Institute Economic Review Issue 252 | Publisher: Cambridge University Press

With international trade increasingly undertaken within vertically fragmented supply chains, this paper considers the impact of changes in trade costs on domestic output. In the context of the UK’s exit from the EU we show that the negative impact on UK output will depend on changes in both...

Introduction: Global value chains and economic dislocations

The world is undergoing an unprecedented shock as a result of the Covid-19 pandemic and the resulting lockdowns in nearly all economies. As major world economies are being put on hold, millions of jobs and incomes are being lost, which has created an imperative for economic policy actions....

Prospects for the World Economy

Publication date: 28 Apr 2020 | Publication type: National Institute Economic Review | Theme: Macroeconomics | NIESR Author(s): Naisbitt, B, Boshoff, J, Holland, D, Hurst, I, Kara, A, Liadze, I, Macchiarelli, C, Mao, X, Sánchez Juanino, P, Thamotheram, C, Whyte, K | Journal: National Institute Economic Review Issue 252 | Publisher: Cambridge University Press

The effects of the coronavirus pandemic and the control measures taken to combat its spread have changed the short-term global economic outlook in an unprecedented manner from that forecast just three months ago. In these highly uncertain times, we now expect widespread falls in GDP, particularly...

Prospects for the UK Economy

Measures to limit the spread of Covid-19 are causing a severe contraction in economic activity of uncertain magnitude. In our main-case scenario, GDP falls by 7 per cent in 2020 and public sector borrowing rises above £200 billion in 2020–21, over £150 billion more than in the OBR's forecast at...

Commentary - Monetary policy in troubled times

Publication date: 27 Apr 2020 | Publication type: National Institute Economic Review | NIESR Author(s): Chadha, J S | Journal: National Institute Economic Review Issue 252 | Publisher: Cambridge University Press

The Commentary in this Review has touched on the mix of monetary and fiscal policies regularly since the Brexit referendum. The timeless issues relating to the framework for monetary and fiscal policy and their appropriate degree of co-ordination have been exposed by the Covid-19 crisis. We have...

The slump of the 1920s

Publication date: 24 Apr 2020 | Publication type: Economic Review Preview | NIESR Author(s): Chadha, J S

This is a preview from the National Institute Economic Review, May 2020, no 252. The largest quarterly fall in output in modern times in the UK (so far) was in the second quarter of 1921 when GDP at constant market prices fell by 12.3 per cent. This was directly followed by the largest quarterly...

COVID-19: Debt Relief and the Global Poorest

Publication date: 23 Apr 2020 | Publication type: Policy Paper | NIESR Author(s): DoyleP

Abstract Pandemic is not the time to “do something”: more than ever, it is the time to “do something coherent.” Aid for the poorest countries conditioned on debt service, just announced by the IMF and G-20, utterly fails that imperative. Instead, grants equivalent to the full IMF estimate of the...

US and UK Labour Markets Before and During the Covid-19 Crash

We examine labour market performance in the US and the UK prior to the onset of the Covid-19 crash. We then track the changes that have occurred in the months and days from the beginning of March 2020 using what we call the Economics of Walking About (EWA) that shows a collapse twenty times faster...

NIESR CPI Tracker - April 2020

Publication date: 22 Apr 2020 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

CPI Reflects Lower Fuel Prices The consumer price index inflation rate decreased by 0.2 percentage points to 1.5 per cent in the year to March 2020, as per data released by the ONS. Our new analysis of 120,395 locally collected goods and services indicates that consumers benefitted from lower...

The measurement of inflation during the lockdown: a trial calculation

Publication date: 22 Apr 2020 | Publication type: Policy Paper | External Author(s): Dixon, H

Abstract The big changes in consumption patterns during the Lockdown need not of themselves have a big effect on measured inflation. Using a guesstimate of lockdown weights for different types of consumption and applying them retrospectively to the 2019 inflation data as an experiment led to a...

NIESR Wage Tracker - April 2020

Publication date: 21 Apr 2020 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Wage Growth to Slow Further Main points According to new ONS statistics published this morning, UK average weekly earnings expanded by 2.9 per cent excluding bonuses in the three months to February 2020 compared to the year before, and by 2.8 per cent if bonus payments are taken into account. The...

Summary of the NIESR Business Conditions Forum February 2020 - The "levelling up" policy

Publication date: 21 Apr 2020 | Publication type: Business Conditions Forum Summary

The National Institute of Economic and Social Research (NIESR) hosted the Business Conditions Forum (BCF) on 12th February. The aim of the BCF is to have informed and analytical discussions of data and surveys to better understand the current state of the UK economy. The discussions are held...

Quantifying the global macroeconomic spillovers of illness and lockdown measures

Publication date: 17 Apr 2020 | Publication type: Economic Review Preview | NIESR Author(s): Holland, D, Liadze, I

This is a preview from the National Institute Economic Review, May 2020, no 252. The Covid-19 pandemic has delivered a shock that is truly global in nature. Cases of the virus have been reported in nearly every single country and territory in the world. At least 135 countries across the globe,...

A Program of Guaranteed Loans to Compensate SME Covid-19 Revenue Losses: Rapid Dispersal and Large Net Economic Benefits

Publication date: 14 Apr 2020 | Publication type: Policy Paper | External Author(s): Milne, A

Abstract This paper explores the costs and benefits of compensating those UK SMEs who have experienced substantial revenue loss as a result of the current closure of their business activities. It finds that the benefits very substantially exceed the costs, by a ratio of 5:1 (every £1 of government...

Central Bank Operations in Government Securities During the Pandemic

Publication date: 9 Apr 2020 | Publication type: Policy Paper | NIESR Author(s): Allen, B

With economic activity severely disrupted by the coronavirus crisis, many governments have been supporting peoples’ incomes and keeping businesses alive by means of income support programmes financed by borrowing. This paper describes how the borrowing is being done in the United States and the...

April 2020 GDP Tracker

Publication date: 9 Apr 2020 | Publication type: NIESR GDP Tracker | NIESR Author(s): Whyte, K

GDP Could Contract by 15 to 25 Per Cent in Second Quarter Note: Grey and Burgundy bars show high and low scenarios Main Points: Once in a century event poses major threat to UK growth. The UK economy could now see growth decline by 5% in the first quarter of 2020, and if a lockdown continues...

Economic Crisis: Virtual Special Issue

Publication date: 3 Apr 2020 | Publication type: National Institute Economic Review | Theme: Macroeconomics | Journal: National Institute Economic Review Issue Virtual issue | Publisher: Cambridge University Press

Our latest "virtual issue" of our Economic Review focussing on Economic Crisis

The Economy on Ice - Meeting the economic challenges during and after the COVID-19 crisis

Publication date: 1 Apr 2020 | Publication type: Policy Paper | NIESR Author(s): Bougheas | JEL Classification: E58, E64, H51

The purpose of this article is twofold. Firstly, it argues that it is doubtful that the currently announced policies will achieve their targets while they create substantial obstacles to the recovery of the post-crisis economy. Secondly, it proposes an alternative plan that its aim is (a) to ensure...

The Fed’s enhanced swap lines and new interventions in the Treasury market

In March 2020, the Federal Reserve enhanced its existing swap lines with foreign central banks, and introduced additional temporary swap lines with other central banks, in order to support the smooth functioning of U.S. dollar funding markets during the coronavirus epidemic. The Federal Reserve...

A preliminary assessment of the possible economic impact of the coronavirus outbreak: update

Publication date: 27 Mar 2020 | Publication type: NiGEM Observations | NIESR Author(s): Hurst, I, Liadze, I, Naisbitt, B, Young, G

Summary • The coronavirus pandemic has triggered a global economic shock. We provide an exploratory analysis of its impact on the global economy • The channels we focus on are a reduction in labour, a reduction in expenditure and investment, an increase in uncertainty, and a temporary shutdown...

Monetary Policy in Troubled Times: New Governor... New Agenda

The new Governor of the Bank of England, Andrew Bailey, faces a formidable challenge. From his very first day in office on 16 March 2020 he has been confronted with an imbalance between the demands on his institution to support the economy and the capacity of the Bank to meet that challenge. The...

NIESR CPI Tracker - March 2020

Publication date: 25 Mar 2020 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

CPI Inflation Stabilises The consumer price index inflation rate decreased by 0.1 percentage points to 1.7 per cent in the year to February 2020, as per data released by the ONS. Our new analysis of 128,677 locally collected goods and services indicates that inflation in the housing and household...

NIESR Wage Tracker - March 2020

Publication date: 17 Mar 2020 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Wage Growth Likely to be Hit by the Covid-19 Outbreak Figure 1 – Average weekly earnings growth (per cent per annum) Main points According to new ONS statistics published this morning, UK average weekly earnings expanded by 3.1 per cent excluding bonuses in the three months to January 2020...

Brexit and the Euro

The year 2019 marked the 20th anniversary of the establishment of the Euro. It was also the last full year before the UK formally left the European Union. This paper examines the relationship between the UK and the euro area. We look at the economic distance between core and periphery groups of...

A Switch to Active Fiscal Policy: NIESR Response to Budget 2020

Publication date: 11 Mar 2020 | Publication type: Other | NIESR Author(s): Chadha, J S, Dolton, P, Manzoni, C, Mao, X, Nguyen, D, Runge, J, Whyte, K, Young, G

On Wednesday 11th March 2020, Chancellor Rishi Sunak delivered his first Budget only 27 days after being appointed. The Chancellor delivered this first, post-Brexit Budget for this Government, which has a strong mandate after its comprehensive election victory in December that should be strong...

A Switch to Active Fiscal Policy: NIESR Response to Budget 2020

Publication date: 11 Mar 2020 | Publication type: Policy Paper | NIESR Author(s): Chadha, J S, Dolton, P, Manzoni, C, Mao, X, Nguyen, D, Runge, J, Whyte, K, Young, G

March 2020 GDP Tracker

Publication date: 11 Mar 2020 | Publication type: NIESR GDP Tracker | NIESR Author(s): Whyte, K

UK remains on course for 0.2 per cent growth in 2020 Q1, but outbreak of the Coronavirus poses a major threat to the economic outlook Main points The UK economy remains on course to grow by 0.2% in first quarter of 2020 (figure1.) According to new ONS statistics published this morning, the UK...

Can Budget 2020 Deliver Growth?

Publication date: 5 Mar 2020 | Publication type: Other | NIESR Author(s): Hantzsche, A, Young, G

On Wednesday 11th March, Chancellor Rishi Sunak will deliver his first Budget only 27 days after being appointed. The Chancellor will deliver his Budget as part of a Government with a strong mandate after its comprehensive election victory in December. We can therefore expect him to use this...

The dynamics of public and private sector wages, pay settlements and employment

Publication date: 2 Mar 2020 | Publication type: Report | NIESR Author(s): Dolton, P, Hantzsche, A, Kara, A | Report to: Office of Manpower Economics

This report addresses the important question of how wage growth in the United Kingdom is determined in the long run and whether wage decisions in the public sector can have spillover effects into the private sector. To analyse these questions, we construct a unique new dataset that is made up of...

URLEY (Using Research Tools to Improve Language in the Early Years) Evaluation Report

Publication date: 26 Feb 2020 | Publication type: Report | Theme: Employment & Social policy | NIESR Author(s): Stokes, L, Runge, J, Dorsett, R | External Author(s): Wright, H, Carr, D, Wiese, J, Heal, J, Anders, K | Project: Evaluation of URLEY (Using Research Tools to Improve Language in the Early Years) | Report to: Education Endowment Foundation

The URLEY (Using Research Tools to Improve Language in the Early Years) programme trains early years teachers to improve children’s language and social-behavioural outcomes in Nursery and Reception Year (ages 3 to 5). Teachers take part in 5 day-long professional development workshops in which they...

NIESR CPI Tracker - February 2020

Publication date: 19 Feb 2020 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

CPI Inflation accelerated in new year as expected The consumer price index inflation rate increased to 1.8 per cent in the year to January 2020, as per data released by the ONS. Our new analysis of 130,278 locally collected goods and services indicates that inflation in the housing and household...

NIESR Wage Tracker - February 2020

Publication date: 18 Feb 2020 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Slight rebound expected for earnings growth Main points According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.2 per cent excluding bonuses in the three months to December 2019 compared to the year before, and by 2.9 per cent if bonus payments are...

February 2020 GDP Tracker

Publication date: 11 Feb 2020 | Publication type: NIESR GDP Tracker | Theme: Macroeconomics | NIESR Author(s): Whyte, K

UK Economy to grow again in 2020 Q1 Please find the full commentary in the attachment

Prospects for the UK economy: Forecast Summary

The decisive result of the general election has reduced political uncertainty, but elevated economic uncertainty is likely to persist until the details of the UK’s future trade relationship with the EU are settled. The March Budget is expected to be focused on ‘levelling up’ income levels across...

World overview: Forecast summary

Publication date: 6 Feb 2020 | Publication type: National Institute Economic Review | Theme: Macroeconomics | NIESR Author(s): Naisbitt, B, Boshoff, J, Hurst, I, Kara, A, Lenoel, C, Liadze, I, Mao, X, Thamotheram, C, Whyte, K | Journal: National Institute Economic Review Issue 251 | Publisher: Cambridge University Press

Global economic growth slowed again last year as increases in tariffs and uncertainty about future tariff impositions and their implications for production activity continued to have negative effects on industrial production, especially in the advanced economies, and global trade. With a weaker...

Stranded Assets and Sovereign States

There is evidence that the risk of stranded assets in the oil and gas sector is underpriced in financial markets. Publicly traded Western oil and gas companies are starting to write down assets, opening up the possibility that more rationalisation of value is likely to come. To the extent that...

The Changing Role of Carbon Pricing in the EU

Carbon pricing has been the most prominent climate change mitigation policy for the EU since the launch of its emissions trading system (ETS) in 2005. Since then, the context of international climate policy as well as of the socio-political and economical context of decarbonisation has changed...

India in the Coming ‘Climate G2’?

Publication date: 6 Feb 2020 | Publication type: National Institute Economic Review | External Author(s): Camuzeaux, J, Sterner, T, Wagner, G | JEL Classification: Q5, F5 | Journal: National Institute Economic Review Issue 251 | Publisher: Cambridge University Press

China and the United States are the two largest emitters of greenhouse gases, making them pivotal players in global climate negotiations. Within the coming decade, however, India is set to become the most important counterpart to the United States, as it overtakes China as the country with the most...

Introduction: The Economic Implications of Climate Change Mitigaton Policies

Publication date: 6 Feb 2020 | Publication type: National Institute Economic Review | NIESR Author(s): Holland, D, Young, G | Journal: National Institute Economic Review Issue 251 | Publisher: Cambridge University Press

The articles in this issue of the Review highlight some of the economic issues involved in acting to cut greenhouse gas emissions to a level consistent with the ambition to limit global temperature increases. Together they help explain why progress in tackling this “urgent problem”is likely to be...

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