Economics & Social Policy Blogs

Britain, her balance of payments, and the benefits of a flexible exchange rate and open economy

Britain, her balance of payments, and the benefits of a flexible exchange rate and open economy

Policy Exchange’s Head of Economics – and former Special Adviser to three chancellors – Warwick Lightfoot highlights new analysis from the Bank of England that show the UK’s foreign investments have enabled it to withstand a deterioration in the her balance of payments. Coupled with a reduction in the exchange rate, the continuing strength of the UK’s foreign investments means she will be able to weather future economic storms and capitalise on the opportunities presented by Brexit.

Perspectives on the Irish Border and Brexit negotiations

Perspectives on the Irish Border and Brexit negotiations

Two of Policy Exchange’s leading experts on Irish Affairs, former Irish diplomat Ray Bassett and former Special Adviser to the First Minister of Northern Ireland Dr Graham Gudgin, evaluate the Stage 1 Brexit Agreement published last week. Although welcome progress has been made, key issues remain outstanding and have the capacity to present difficultly if not resolved.

Irish hard line presents opportunities for UK

Irish hard line presents opportunities for UK

The Irish border issue is now taking a central place in the Brexit negotiations. Conventional wisdom in both Dublin and Brussels is failing to recognise that the border issue can be solved. Policy Exchange’s Chief Economic Adviser Dr Graham Gudgin, one of the leading authorities on cross border economics, explains that technological developments mean frontiers are already more than fixed lines on a map – and that elements in the Irish Government and the Commission are being far too slow to acknowledge this, preferring instead to engage in “Brit-bashing”.

Policy Exchange Budget Response, Part 1 – The Forecasts

Policy Exchange Budget Response, Part 1 – The Forecasts

In Part One of Policy Exchange’s analysis of the Budget, Chief Economic Adviser Dr Graham Gudgin looks at the forecasts produced by the Office for Budget Responsibility. These official forecasts are the basis for spending decisions today and planning for the future – which means they must be robust. As we saw with the overly pessimistic Treasury forecasts regarding Brexit, they are not always right.

‘Without sound finance, you cannot have a strong economy with which to fund public services’ – the moral the Chancellor should choose for his Budget

‘Without sound finance, you cannot have a strong economy with which to fund public services’ – the moral the Chancellor should choose for his Budget

Policy Exchange’s Research Fellow in Economics, Mike Taylor, sets out the guiding principles with which to judge the Autumn Budget. Highlighting the importance of fiscal sustainability, Mike cautions those seeking to use the Japanese experience to justify higher borrowing, pointing out the limits of any comparison with the UK.

Two million face a mortgage rate rise – it should have been sooner

Two million face a mortgage rate rise – it should have been sooner

Today’s quarter point rise in interest rates by the Monetary Policy of the Bank of England is notable as the first increase in ten years. But at 0.5% Bank Rate is still at extremely low levels. Indeed today’s move merely reverses last August’s quarter point cut, which was an easing of policy designed to help offset the anticipated slowdown in growth following the EU referendum result. Given that by the end of last year it was clear that the economy was actually in fairly good shape it would have been prudent to have reversed this last rate reduction several months ago. But it is better late than never.

Universal Credit and the big labour market questions the UK needs to consider

Universal Credit and the big labour market questions the UK needs to consider

Warwick Lightfoot, Head of the Economics Unit, argues that the controversy over the introduction of Universal Credit is an opportunity to revisit the fundamentals of a modern, market-friendly benefit system. At present benefits extend too far up the income distribution, damaging incentives and productivity as benefit withdrawal pushes effective marginal tax rates to extreme levels. In addition, greater regional variation in benefits, to take account of local labour market conditions, would be a major improvement.

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