Economics & Social Policy

Why the Government should spend more on capital

This paper argues that the Government should spend more on capital investment. The case was already strong before the Covid-19 crisis and has been strengthened since, as its financing has become more affordable. The paper highlights the importance of taking advantage of the present macro-economic environment afforded by low borrowing costs to provide stable – and sizeable – funding for new infrastructure through an increase in capital spending by the public sector. Additional capital spending, in excess of the fiscal rules, would be sustainable and affordable

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A pro-growth economic strategy

The UK is enduring a health and economic crisis. Despite near-term uncertainties, we believe that a new macro-economic framework can help the UK achieve stronger future growth.

A new macro-economic policy framework is needed, as outlined here, based on the three arrows: of credible fiscal activism; monetary and financial stability based on a new remit for the Bank of England; and a supply-side agenda.

Low borrowing costs create a likely lengthy window of opportunity to emerge from this crisis without being panicked into policy measures such as austerity, but it is possible that inflation and yields could rise, so it is not a risk-free option. Success depends upon a clear and credible policy approach.

Read More

Negative interest rates offer only a sugar high. They won’t revive monetary policy

Both Wall Street and the City of London are speculating whether the next innovation in monetary policy will be the use of negative interest rates as a deliberate tool. The new Governor of the Bank of England, Andrew Bailey, has changed the Bank’s position from that of the previous Governor, Mark Carney, who made clear that negative interest rates were not a proposition he was seriously considering. The central bank’s Chief Economist, Andrew Haldane, and one member of the Monetary Policy Committee (MPC), Silvana Tenreyro, have canvassed the idea.

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Helping Britain’s start-ups

The Government has outlined an audacious package of measures aimed protecting as much of the UK’s productive potential as possible. But it is an outlier among comparable European economies in that it is yet to announce measures to help start-ups and pre-revenue firms. Jan Zeber and Dr Gerard Lyons outline the unique challenges faced by those firms and what can be done to support them.

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Speed, Scale and Simplicity

The government has outlined an audacious package of measures aimed at dealing with the economic consequences of COVID-19, but in a fast- moving environment, it should be no surprise that policy has to continue to evolve. There have already been four fiscal packages in recent weeks, beginning with the Budget, then one focused on the corporate sector, the next on employees and last week’s targeting the self-employed. This has been supported by monetary policy. Despite this, further action is needed supported by another fiscal boost and further monetary action. It is not only the scale of the stimulus that needs to increase, but the execution of the policies. Also, the policy reaction on job protection has been impressively large, but the lack of any precedent means we cannot be certain how the measures will work.

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Limiting the Economic Impact of the Covid-19 Virus

On Thursday, the Chancellor unveiled his fourth round of policy measures to boost the economy during the Coronavirus crisis. He announced what he called a coherent, coordinated and comprehensive scheme for the self-employed. This positive approach from the Chancellor, and the speed of the Government’s response, is worthy of congratulations. Yet inevitably, in this fast-moving crisis, there remain some areas to iron out, largely linked to the policies’ likely execution and administration. The biggest challenge is the delay, as the measures unveiled will take a couple of months to implement, and the strain that this may place on those self-employed who do not have access to income during this time.

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Latest Economics & Social Policy Publications

Why the Government should spend more on capital

Why the Government should spend more on capital

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This paper argues that the Government should spend more on capital investment. The case was already strong before the Covid-19 crisis and has been strengthened since, as its financing has become more affordable. The paper highlights the importance of taking advantage of the present macro-economic environment afforded by low borrowing costs to provide stable – and sizeable – funding for new infrastructure through an increase in capital spending by the public sector. Additional capital spending, in excess of the fiscal rules, would be sustainable and affordable

A pro-growth economic strategy

A pro-growth economic strategy

, and

The UK is enduring a health and economic crisis. Despite near-term uncertainties, we believe that a new macro-economic framework can help the UK achieve stronger future growth.

A new macro-economic policy framework is needed, as outlined here, based on the three arrows: of credible fiscal activism; monetary and financial stability based on a new remit for the Bank of England; and a supply-side agenda.

Low borrowing costs create a likely lengthy window of opportunity to emerge from this crisis without being panicked into policy measures such as austerity, but it is possible that inflation and yields could rise, so it is not a risk-free option. Success depends upon a clear and credible policy approach.

Helping Britain’s start-ups

Helping Britain’s start-ups

and

The Government has outlined an audacious package of measures aimed protecting as much of the UK’s productive potential as possible. But it is an outlier among comparable European economies in that it is yet to announce measures to help start-ups and pre-revenue firms. Jan Zeber and Dr Gerard Lyons outline the unique challenges faced by those firms and what can be done to support them.

Latest Economics & Social Policy Blogs

Negative interest rates offer only a sugar high. They won’t revive monetary policy

Negative interest rates offer only a sugar high. They won’t revive monetary policy

Both Wall Street and the City of London are speculating whether the next innovation in monetary policy will be the use of negative interest rates as a deliberate tool. The new Governor of the Bank of England, Andrew Bailey, has changed the Bank’s position from that of the previous Governor, Mark Carney, who made clear that negative interest rates were not a proposition he was seriously considering. The central bank’s Chief Economist, Andrew Haldane, and one member of the Monetary Policy Committee (MPC), Silvana Tenreyro, have canvassed the idea.

Time to rethink macroeconomic policy

Time to rethink macroeconomic policy

A new Chancellor of the Exchequer and a new Governor of the Bank of England offer the opportunity of taking a fresh look at not just monetary policy, but macro-economic policy as a whole and the role of fiscal policy within it. A decade after the Great Recession, there are profound questions that policy makers should be exploring.

Latest Economics & Social Policy News

Latest Economics & Social Policy Events


  • Wednesday, 26 June, 2019
    14:00 - 15:00

For more than 20 years, the funding of long-term social care has been recognised as a central challenge by successive governments. Arguments around it played a contentious part in the Conservative Party’s election campaign in 2017 – with the proposed solution earning the sobriquet “the Dementia Tax”. The difficulty that the present Government has had in mapping a practical way forward is reflected in the failure to publish the promised green paper. But Policy Exchange’s paper, 21st Century Social Care, provides an answer, arguing that the state should fund long-term social care and complete the welfare state, which polling shows has massive support.


  • Wednesday, 12 June, 2019
    18:00 - 19:00

Josh Frydenberg was elected to the Australian Parliament in 2010 as the Member for Kooyong. He is the seventh person since Federation to hold this seat. In August 2018, he was appointed Treasurer of Australia and Deputy Leader of the Liberal Party, having previously served as Minister for the Environment and Energy, Minister for Resources, Energy and Northern Australia, Assistant Treasurer – and Parliamentary Secretary to the Prime Minister since the 2013 election.


  • Monday, 26 November, 2018
    18:00 - 19:30

Policy Exchange is… multidisciplinary, highly influential, a productive force in the heart of Westminster and our political system,” said Mark Carney, Governor of the Bank of England, at a Policy Exchange event with Alan Greenspan, former Chairman of the Federal Reserve, and Adrian Wooldridge, The Economist’s Bagehot columnist, to launch their new book, Capitalism in America.


  • Monday, 23 July, 2018
    17:00 - 18:30

Marking the launch of a new paper, Policy Exchange invites you to a panel discussion on “Is Britain’s Growth Model Broken – and Can Brexit Help to Fix It?” The paper’s author Dr Christopher Bickerton will introduce his research, followed by a panel discussion including the former Permanent Secretary to the Treasury Lord Macpherson of Earl’s Court.

Venue:  

Address:
Policy Exchange, 6th Floor, 8 – 10 Great George St, Westminster, London, SW1P 3AE, United Kingdom


  • Monday, 2 July, 2018
    18:00 - 19:30

Adam Smith is now widely regarded as ‘the father of modern economics’ and the most influential economist who ever lived. But what he really thought, and what the implications of his ideas are, remain fiercely contested. Jesse Norman MP’s book shows how, far from being a doctrinaire ‘libertarian’ or ‘neoliberal’ thinker, Smith offers an evolutionary theory of political economy, which balances the roles of markets and the state.


  • Thursday, 28 June, 2018
    13:00 - 14:30

Secretary of State for International Development Rt Hon Penny Mordaunt MP and Brigadier John Deverell spoke on the strategic role of soft power, outlining how her vision for the future of UK development policy applies in the context of civilian–military cooperation, the interplay between hard and soft power, and the importance of development’s role alongside defence and diplomacy.


  • Monday, 21 May, 2018
    8:30 - 15:45

Policy Exchange hosted a major conference considering the future of the Union, with keynote speeches from Ruth Davidson, Michael Gove, Arlene Foster, Brandon Lewis, Alistair Darling, Jim Murphy and Theresa Villiers. In bringing together speakers from different parties, different nations and opposite sides of the Brexit debate, we demonstrated that unionism can be the bridge between the different elements in our divided society.

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Tomorrow at Labour Party Conference, Policy Exchange hosts, @JonCruddas_1, @rmwdickinson, @AnyaMartin8, and Samuel Hughes For an online discussion on "Useful, Beautiful and Forever: Why the Left should lead again on building beautifully" Register here 👇 #LabourConnected