Publications

The University pension scheme – a way forward

Publication date: 25 Nov 2021 | External Author(s): Miles, D , Sefton, J

The University Superannuation Scheme (USS) is trapped between a rock and a hard place. We propose a way forward. The current problem: The USS is in a difficult position. Given its portfolio of assets, it is more than likely that it has sufficient funds to make good on all the pension promises made...

NIESR Monthly CPI Tracker: Customers feel the bite of VAT hike

Publication date: 17 Nov 2021 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

Main points Headline consumer inflation increased significantly to 4.2 in October 2021 from 3.1 per cent in September. Our measure of underlying inflation as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes increased to 2.1 per cent in October (figure...

NIESR's Monthly Wage Tracker: Inflation and Tax Rises Will Erode Record Earnings Growth

Publication date: 16 Nov 2021 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Main Points We expect weekly earnings annual growth to average 5.7 per cent in 2021 – the highest in two decades - and 3.6 per cent in real terms, after 1.8 per cent (nominal) and 0.8 per cent (real) in 2020. The strength of AWE is explained by high bonuses, robust public sector pay growth and a...

November GDP Tracker - Activity nears pre-Covid levels but faces headwinds

Publication date: 11 Nov 2021 | Publication type: NIESR GDP Tracker | Theme: Macroeconomics | NIESR Author(s): MacQueen, R

Main points With growth slowing in the third quarter, but September stronger than expected, we now forecast economic activity to increase by 1.1 per cent in the last quarter of 2021, including month-on-month growth of 0.4 per cent in October. The end of the post-Covid bounce in consumer services...

Global Economic Outlook Autumn 2021: Inflation: It’s Baaack

Publication date: 9 Nov 2021 | Publication type: National Institute Global Economic Outlook | Theme: Macroeconomics | NIESR Author(s): Chadha, J S, Macchiarelli, C, Naisbitt, B, Boshoff, J, Holland, D, Hurst, I, Liadze, I, Mao, X, Sánchez Juanino, P, Thamotheram, C, Whyte, K | Journal: National Institute Global Economic Outlook No. 4 Vol. Series B | Publisher: NIESR, London

The full outlook is only available to subscribers. If you are interested in subscribing to this publication, please subscribe here. Executive Summary The global growth story has evolved from bounce-back to slowdown, but inflation seems to be ever more virulent as the virus continues to crimp...

UK Economic Outlook Autumn 2021: Recovery: Stalling not Soaring

Publication date: 9 Nov 2021 | Publication type: National Institute UK Economic Outlook | Theme: Macroeconomics | NIESR Author(s): Chadha, J S, Lenoel, C, MacQueen, R, MortimerLeeP, Pabst, A, Marioni, L, Rincon-Aznar, A, Aitken, A, Tong, M, Bhattacharjee, A | External Author(s): Dumitru, A, Görtz, C, McGowan, D, Yeromonahos, M, Kennedy, J, Szendrei, T | Journal: National Institute UK Economic Outlook No. 4 Vol. Series A | Publisher: NIESR, London

The next few months are likely to bring stuttering growth, rising inflation and widening income inequalities to the UK economy. Household incomes will be painfully squeezed by a combination of earnings growth lagging inflation, rising interest rates and tighter fiscal policy. The effects will be...

Carbon tax could temporarily raise inflation and lower GDP in most OECD economies, NIESR study shows

Publication date: 5 Nov 2021 | Publication type: Other | NIESR Author(s): Whyte, K | External Author(s): Holland, D

Climate change policies such as carbon taxes and emissions trading schemes (ETSs) have become key policy tools to reduce greenhouse gas (GHG) emissions and limit global temperature increases. Using the National Institute Global Macroeconomic Model (NiGEM) we illustrate the expected macroeconomic...

NIESR Monthly Covid Tracker - New Cases declining again after school spill-over

Publication date: 4 Nov 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Figure 1 – R and Seven-day Case Counts per 100,000 Population: UK nations and England regions Main points We report R estimates and forecasts of new cases, hospital admissions and deaths for the nations and regions. The next tracker will be released on 2nd December. The R number remains below...

Wage pressures: a perspective from online job advertisements

Publication date: 4 Nov 2021 | Publication type: Quarterly UK Economic Outlook Preview | External Author(s): Jack Kennedy

This is a preview from the Quarterly UK Economic Outlook, November 2021. Advertised pay in job postings on job listings website Indeed is rising fast in sectors where surging demand for new workers has outpaced supply. In rebounding sectors like food, distribution, construction and manufacturing...

Furlough and household financial distress during the Covid-19 pandemic – insights for future lockdowns

Publication date: 4 Nov 2021 | Publication type: Quarterly UK Economic Outlook Preview | External Author(s): Christoph Görtz, Danny McGowan, Mallory Yeromonahos

This is a preview from the Quarterly UK Economic Outlook, November 2021. The Coronavirus Job Retention Scheme (CJRS) was a key element of the government’s economic response to the Covid-19 pandemic. Introduced in March 2020, the CJRS aimed to safeguard jobs and income by allowing employers to place...

NIESR’s Response to the Autumn Budget and Spending Review 2021

Publication date: 27 Oct 2021 | Publication type: Other

Our response to Chancellor Rishi Sunak's Autumn Budget and Spending Review delivered on Wednesday 27 October 2021. We look at: Public and Private Sectors Public Sector Pay Business Rates Regional Regeneration Fiscal Framework Fiscal Policy Early Childcare and Education...

The New Employment Tax

Publication date: 22 Oct 2021 | Publication type: Policy Paper | NIESR Author(s): MortimerLeeP

The government announced the employment tax increase in September adds needless complexity to the tax system, encourages self-employment rather than employment, and hits hardest the labour-intensive sectors that suffered most from Covid. It will encourage a shift away from labour-intensive sectors...

NIESR CPI Tracker: Supply-side effects feeding through to headline inflation

Publication date: 20 Oct 2021 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

Main points Headline consumer inflation decreased marginally, from 3.2 per cent in August 2021 to 3.1 per cent in September. Our measure of underlying inflation as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes remained unchanged at 1.6 per cent in...

The Sahm Rule and Predicting the Great Recession Across OECD Countries

We examine the start date of the Great Recession across OECD countries based on two successive quarters of negative GDP growth recession. For most OECD countries this establishes the start of recession in Q22008 or Q32008. We find that the Sahm Rule identifies the start of recession in the US to...

October GDP Tracker: Staycations boost August growth but slowdown ahead

Publication date: 13 Oct 2021 | Publication type: NIESR GDP Tracker | NIESR Author(s): MacQueen, R

Main points Thanks to growth of 0.4 per cent in August and revisions to earlier months, the ONS now estimates that output is only 0.8 per cent below its pre-Covid February 2020 peak, with several sectors having already surpassed that level. But supply constraints are growing and likely to persist...

NIESR Wage Tracker: Underlying earnings to accelerate to 4.5%

Publication date: 12 Oct 2021 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Main Points The growth rate in average weekly earnings including bonuses (AWE) in Great Britain decreased in the three months to August to 7.2 per cent compared to a year ago, down from 8.3 per cent in the three months to July. This is in line with the 7.1 per cent we forecast last month....

NIESR Covid-19 Tracker: New Cases declining across all regions and nations

Publication date: 7 Oct 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Figure 1 – R and Seven-day Case Counts per 100,000 Population: UK nations and England regions Main points We report R estimates and forecasts of new cases and hospital admissions for the nations and regions. With this tracker we move to a monthly reporting frequency. The next tracker will be...

Notes and Contributions: The new battle of ideas: How an intellectural revolution will reshape society

Publication date: 1 Oct 2021 | Publication type: National Institute Economic Review | External Author(s): Collier, P | JEL Classification: A12; A13; B55; P11; P17; P26 | Journal: National Institute Economic Review No. 257 | Publisher: Cambridge University Press

Britain, like many other societies within the OECD, has been facing cumulative and interdependent social, political, and economic crises which came to a head shortly before COVID. The shock of COVID has accentuated these crises, creating a state of policy flux in which all long-established...

Introduction: Economic contributions to infection control

Publication date: 1 Oct 2021 | Publication type: National Institute Economic Review | External Author(s): Toxvaerd, F, Makris, M | Journal: National Institute Economic Review Vol. 257 | Publisher: Cambridge University Press

The COVID-19 crisis has upended the lives of many, causing almost 200M global infections to date, over 4M deaths and untold damage to the livelihoods of millions. Although the recent vaccine rollout in some parts of the world offers some room for optimism, the epidemic is still far from defeated...

The great COVID-19 vaccine rollout: Behavioural and policy responses

Using daily data on vaccinations, disease spread and measures of social interaction from Google Mobility reports aggregated at the country level for 112 countries, we present estimates of behavioural responses to the global rollout of COVID-19 vaccines. We first estimate correlates of the timing...

Time series modelling of epidemics: Leading indicators, control groups and policy assessment

This article shows how new time series models can be used to track the progress of an epidemic, forecast key variables and evaluate the effects of policies. The univariate framework of Harvey and Kattuman (2020, Harvard Data Science Review, Special Issue 1—COVID-19, https://hdsr.mitpress.mit.edu/...

The statistical challenges of modelling COVID-19

In 2020–2021, the world has been gripped by a pandemic that no living person has ever known. The coronavirus pandemic is undoubtedly the greatest challenge the world has faced in over a generation. The imperative of statistical modelling is not only to manage the short-run crisis for the health...

Endogenous social distancing and containment policies in social networks

Can smart containment policies crowd out private efforts at social distancing? We analyse this question from the perspective of network formation theory. We focus in particular on the role of externalities in social distancing choices. We also look at how these choices are affected by factors such...

How much risk is the USS taking?

Publication date: 29 Sep 2021 | Publication type: Policy Paper | External Author(s): Miles, D, Sefton, J Issue 29

We analyse the probability distribution of outcomes for the USS in the light of conflicting claims about its sustainability in the absence of changes in contributions or in benefits. We find that a substantial investment in riskier assets (equities) makes the average outcome one in which the scheme...

NIESR Covid-19 Tracker: Reproduction Number (R) and Forecasts of New Cases: New cases forecast to decline in all but the young

Publication date: 23 Sep 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Main Points We report R estimates and forecasts of new cases and hospital admissions for England and Scotland. The R number has fallen below 1 in all nations and regions apart from Wales where it is slightly above 1 (Figure 1). For the adult population in England, we forecast declines in new...

NIESR CPI tracker - September 2021 - Underlying inflation cautions against panic

Publication date: 15 Sep 2021 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

Main points While the headline consumer inflation increased by a large margin, from 2 per cent in July 2021 to 3.2 per cent in August, the rise in underlying inflation was more limited. Our measure of underlying inflation as measured by the trimmed mean, which excludes 5 per cent of the highest...

NIESR Wage Tracker - September 2021 - Labour market recovery on track as furlough ends

Publication date: 14 Sep 2021 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Figure 1 - The U-shaped recovery in the labour market (source: ONS, HMRC) Main points The labour market shows signs of a U-shaped recovery, with the number of payrolled employees returning in August to its pre-pandemic (February 2020) level of 29.1 million. Employment growth is fastest in...

What economic complexity theory can tell us about the EU’s pandemic recovery and resilience plans

Publication date: 13 Sep 2021 | Publication type: Policy Paper | NIESR Author(s): Macchiarelli, C | External Author(s): Hausmann, R, Santos, M, Giacon, R | Report number: 28

A little over a year ago, the EU’s political leaders agreed on an unprecedented fiscal package – dubbed ‘Next Generation EU’ – to aid Europe’s recovery from the pandemic. Ricardo Hausmann, Miguel Angel Santos, Corrado Macchiarelli and Renato Giacon write that economic complexity theories can...

September 2021 GDP Tracker - Reopening bounce slows as Delta hits

Publication date: 10 Sep 2021 | Publication type: NIESR GDP Tracker | NIESR Author(s): MacQueen, R

Main points Growth of only 0.1 per cent in July was the lowest since January. The weaker than expected outcome resulted from the end of the spring re-opening boom at the same time as the Delta variant hit labour supply and consumer confidence. We forecast growth to pick up in August, thanks to...

NIESR Covid-19 Tracker: Reproduction Number (R) and Forecasts of New Cases: Back to School - Moderate Rise in New Cases Forecast

Publication date: 9 Sep 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Main Points We resume our bi-weekly series, reporting R estimates and forecasts of new cases and hospital admissions for England and Scotland, after a short summer break. Figure 1 compares our August 12th forecasts of new cases with actual cases for England in the following 4 weeks. This...

NIESR Term Premium Tracker - UK Term Premium Drops to Four Month Low Over Summer

Publication date: 9 Sep 2021 | Publication type: NIESR Term Premium Tracker | NIESR Author(s): Macchiarelli, C

Figure 1: UK 10-year government bond yield and decomposition (percent) We decompose long-term treasury yields into two components: expectations of the future path of short-term bond yields and a term premium. The term (or risk) premium is the compensation investors require for bearing the risk...

Group testing and social distancing

An often overlooked strategy for fighting the COVID-19 pandemic is group testing. Its main advantage is that it can scale, enabling the regular testing of the whole population. We argue that another advantage is that it can induce social distancing. Using a simple model, we show that if a group...

Commentary: Quantitative tightening: Protecting monetary policy from fiscal encroachment

As we face up to the need to plan an eventual exit from quantitative easing (QE), in this Commentary we consider how to reform both sides of the central bank balance sheet in a manner that will prepare the ground for a contraction in the balance sheet that does not expose the central bank to...

NIESR Wage Tracker - August 2021

Publication date: 17 Aug 2021 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

The U-shape recovery of the labour market Main points The labour market recovery is in a U shape, with the number of payrolled employees higher than in April 2020 and the number of vacancies at a record high of 953,000. A robust growth of labour demand and limited candidate availability are...

Modelling the impact of Covid-19 on the UK economy: an application of a disaggregated New-Keynesian model

We set out a framework that can be used to evaluate policies intended to mitigate the economic effects of Covid-19. In our framework shocks that affect only certain sectors can spill over to other sectors because of input-output linkages and limited income insurance. We show that policies such as...

August 2021 GDP Tracker

Publication date: 12 Aug 2021 | Publication type: NIESR GDP Tracker | NIESR Author(s): KucukH

Rapid growth to slow in third quarter Main points June’s month-on-month growth of 1 per cent in GDP was mainly driven by the effects of reopening which led to a 1.5 per cent growth in services sector in June 2021. Return to some normality in health activities and increased demand for indoor...

NIESR Covid-19 Tracker: Reproduction Number (R) and Forecasts of New Cases: Breakthrough Infections Detected

Publication date: 12 Aug 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Breakthrough Infections Detected Main points We highlight a somewhat muted reversal of the decline in cases that was evident two weeks ago, and offer possible explanations. Our next tracker will be released on 9th September. It is likely that some of the increased infection transmission resulting...

NIESR CPI Tracker - August 2021 - Base effects nudge inflation lower

Publication date: 8 Aug 2021 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

Main points Underlying inflation decreased from 1.6 per cent in June to 1.4 in July as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes (figure 1). Headline consumer inflation decreased by a larger margin, decreasing to 2 per cent in July from 2.5...

Summary of the NIESR Business Conditions Forum July 2021 - Business survey data: What can the PMI tell us about post-Covid UK recovery and inflation?

Publication date: 5 Aug 2021 | Publication type: Business Conditions Forum Summary

Agenda The discussion at this meeting focused on what insight that can be gleaned from business survey data about the UK post-Covid recovery, and what that means for inflation in the future.

UK Economic Outlook Summer 2021: Emerging from the Shadow of Covid-19

Publication date: 2 Aug 2021 | Publication type: National Institute UK Economic Outlook | Theme: Macroeconomics | NIESR Author(s): KucukH, Lenoel, C, MacQueen, R | Journal: National Institute UK Economic Outlook No. 3 Vol. Series A Issue Summer 2021 | Publisher: NIESR, London

In our Summer forecast for the UK economy GDP grows by 6.8 per cent in 2021, an upward revision of 1.1 percentage points since May’s Spring Outlook, and 5.3 per cent in 2022. The latest data suggest that – while headline growth and business optimism are strong – the recovery is not yet broad-based...

Global Economic Outlook Summer 2021: Lifting the Pandemic Cloud

Publication date: 2 Aug 2021 | Publication type: National Institute Global Economic Outlook | Theme: Macroeconomics | NIESR Author(s): Macchiarelli, C, Naisbitt, B, Boshoff, J, Holland, D, Hurst, I, Liadze, I, Mao, X, Sánchez Juanino, P, Thamotheram, C, Whyte, K | Journal: National Institute Global Economic Outlook No. 3 Vol. Series B Issue Summer 2021 | Publisher: NIESR, London

A preview of NIESR's Summer 2021 Global Economic Outlook can be found below. The full outlook is only available to subscribers. If you are interested in subscribing to this publication, please subscribe here. Our Summer global economic outlook projects slightly stronger short-term global economic...

The long and uncertain road to exiting Quantitative Easing

Publication date: 30 Jul 2021 | Publication type: Quarterly UK Economic Outlook Preview | NIESR Author(s): Lenoel, C

This is a preview from the Quarterly UK Economic Outlook, August 2021. There is a rich literature on Quantitative Easing (QE) but less so on its unwinding. QE was initiated in 2001 in Japan, followed by the US in 2008 after the Global Financial Crisis, and there has been time to evaluate it, while...

Foreign aid makes good macroeconomic sense

Publication date: 30 Jul 2021 | Publication type: Quarterly UK Economic Outlook Preview | NIESR Author(s): Holland, D | External Author(s): Dirk Willem te Velde

This is a preview from the Quarterly UK Economic Outlook, August 2021. On 25 November 2020, the UK government took the decision3 to reduce the budget for foreign aid from 0.7 to 0.5 per cent of gross national income (GNI) in 2021. On 13 July 2021, Parliament voted in favour of maintaining these...

NIESR Covid-19 Tracker: Reproduction Number (R) and Forecasts of New Cases: After the Euros spike, herd immunity may be in sight

Publication date: 29 Jul 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Figure 3: National Forecasts of New COVID-19 Cases Main points Two weeks ago, on July 15th, we highlighted the strong signs of the Delta wave was approaching a peak in the North West. We pointed out that other regions would likely follow suit. Data across nations, regions and local...

Quantitative Tightening: Protecting Monetary Policy from Fiscal Encroachment

Publication date: 28 Jul 2021 | Publication type: Policy Paper | Theme: Macroeconomics | NIESR Author(s): Chadha, J S, Allen, W. A., Turner, P | Report number: 27

As we face up to the need to plan an eventual exit from quantitative easing, in this Commentary we consider how to reform both sides of the central bank balance sheet in a manner that will prepare the ground for a contraction in the balance sheet that does not expose the central bank to excessive...

NIESR Covid-19 Tracker: Reproduction Number (R) and Forecasts of New Cases: Signs of peaking

Publication date: 15 Jul 2021 | Publication type: NIESR Covid-19 Tracker | NIESR Author(s): Thamotheram, C

Signs of peaking Main points We comment on the Delta variant wave that has emerged throughout the UK. Focussing on the North West where this wave emerged first can be revealing as to how the wave is likely to advance in other regions of the UK that saw later outbreaks. Figure 1 provides R...

NIESR Wage Tracker - July 2021

Publication date: 15 Jul 2021 | Publication type: NIESR Wage Tracker | NIESR Author(s): Lenoel, C

Underlying wage growth accelerates to 3.8% because of labour shortages in some sectors Main points A strong growth of labour demand and limited candidate availability is creating temporary labour shortages in some sectors like health and social services. Vacancies reached a record 862,000....

NIESR CPI Tracker - July 2021

Publication date: 14 Jul 2021 | Publication type: NIESR CPI Tracker | NIESR Author(s): Boshoff, J

Underlying inflation signals additional price pressures Main points Underlying inflation increased from 1.2 per cent in May to 1.6 in June, its highest level since April 2018 as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes (figure 1). Headline...

Migrant students in the UK pandemic - Impacts, school reponses and community approaches

Publication date: 13 Jul 2021 | Publication type: Report | NIESR Author(s): Manzoni, C, DAngeloA

Lockdowns and school closures in response to Covid-19 have impacted on all students in the UK, but have also acted as multipliers of educational inequalities. Among the most vulnerable are newly arrived migrant children, as they tend to be less familiar with the educational system and life in the...

July 2021 GDP Tracker

Publication date: 9 Jul 2021 | Publication type: NIESR GDP Tracker | NIESR Author(s): MacQueen, R

Continued economic recovery put in doubt by Delta variant Figure 1 - UK GDP Main points May’s month-on-month growth of 0.8% disappointed, with little sign of momentum in either April or May outside the sectors which grew due to the lifting of Covid-19 restrictions. With several indicators showing...