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UK economic policy and prospects

UK economic policy and prospects . Jonathan Portes June 2013 www.niesr.ac.uk Twitter: @ jdportes Niesr.ac.uk/blog. Slowest recovery in recorded economic history. What explains UK economic underperformance?. Fiscal policy: predictable result of premature consolidation

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UK economic policy and prospects

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  1. UK economic policy and prospects Jonathan Portes June 2013 www.niesr.ac.uk Twitter: @jdportes Niesr.ac.uk/blog

  2. Slowest recovery in recorded economic history

  3. What explains UK economic underperformance? • Fiscal policy: predictable result of premature consolidation • Continued dysfunctionality of financial sector • Commodity prices/imported inflation • And of course the eurozone • Fortunately the labour market has come to the rescue..

  4. Blaming the eurozone? Yes and no..

  5. Long term damage, here and elsewhere

  6. Short term: signs of modest improvement...

  7. How to minimise the damage? Lots of Plans.. • Posen: public and private investment, BIB, BoE purchases • NIESR: public infrastructure, NICs, reverse benefit cuts • LSE GC: investment, skills/human capital, innovation • Fabians (Pryce, Weldon, Mazzucato, Portes, et al) : state banks, innovation, immigration, inequality, etc. • “Hayekians”: cut spending “properly”, cut taxes No-one left to defend “muddling through”, but that’s what we’ll get..

  8. More public investment could boost output in both short and long term..

  9. Can we afford it?.

  10. What does a (medium-term) growth strategy look like? • Building on successes (competition, labour market) • Addressing weaknesses (management, educational underperformance, planning/housing) • Identifying and maximising sectors of comparative advantage (HE, finance, creative industries, business services, pharma, hi-tech manufacturing) • Much of this is common ground – so what are the issues/challenges?

  11. Housing • Housing market contributes to number of structural problems with UK economy: • Financial instability • Labour immobility • Inequality/social immobility • But Help To Buy has achieved the impossible.. • Reforms/investment needed for social housing, planning, and mortgage finance

  12. UK economic policy and prospects Jonathan Portes February 2013 www.niesr.ac.uk Twitter: @jdportes Blog: notthetreasuryview.blogspot.com

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