Jack Leslie

The Treasury and Bank of England should prepare for a three-pronged economic shock from ‘no deal’

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It’s a well-worn trope that no one knows what the economic impact of a no deal Brexit would be. And for good reason. The scale of disruption at the border, in supply chains and in the wider economy, is impossible to predict with any accuracy. Much would depend on the timing and the success of … Continued

Torsten Bell

Is the UK recession ready?

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The good news is we’ve now managed a recession free decade since the financial crisis. The bad news is that history teaches us this is quite unusual – booms and bust haven’t been abolished. This matters – downturns have very high costs, even when they’re not of the global financial crisis earth-shattering sort. On average … Continued

Richard Hughes

Another summer blockbuster (on fiscal risks) from the OBR

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Today the OBR published its second Fiscal Risks Report, a comprehensive assessment of all the things that could go wrong with the UK’s public finances over the next 50 years. And it is a summer blockbuster – topping out at 293 pages in total. Fiscal risk analysis is the new cutting edge in fiscal policymaking, … Continued

Torsten Bell

The rate rise debate should prompt wider questions about the living standards impact of monetary policy

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Tomorrow the Bank of England is expected to raise interest rates for the first time in a decade, kicking off the first tightening cycle for monetary policy in 14 years. Whether or not the Bank’s Monetary Policy Committee behaves as markets anticipate, the expectation has triggered two big questions. First there is the macro question … Continued

Torsten Bell

The Bank will bring out its sledgehammer this week – but it needs to explain which nut it’s trying to crack

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On Thursday the Bank of England’s Monetary Policy Committee is going to act for the first time since July 2012. Expect general excitement as one part of the British state gets round to doing something big in the wake of the Brexit vote. But this excitement should be matched by realism about what the Bank … Continued

Matthew Whittaker

Responsibility for avoiding a post-Brexit downturn rests as much with our politicians as our economists

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Despite boasting an impressive track record for inaction in recent years, the Monetary Policy Committee’s decision to leave rates on hold last week still surprised many. Expectations had built following Mark Carney’s statement on 30 June that post-Brexit “deterioration” in the economic outlook meant that “some monetary policy easing [would] be required over the Summer”. … Continued

Torsten Bell

Preparing for the next crisis – it’s best to ask questions now so we can shoot later

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In the decade leading up to the financial crisis not one speech by the then Chancellor of the Exchequer Gordon Brown mentioned quantitative easing. Between boom, bust, and prudence, unconventional monetary policy did not get a look in. The then Governor of the Bank of England managed one mention, albeit in the context of Japan … Continued

Matthew Whittaker

On borrowed time? The need to make the most of the ‘window of opportunity’ provided by low interest rates

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More than six years after the Bank of England’s base rate was cut to 0.5 per cent, interest rate rises finally appear to be back on the agenda. There may be good reasons for thinking that modest and gradual action will soon become appropriate, but the debt overhang associated with the pre-crisis credit boom continues … Continued

Households have been coping remarkably well with high housing costs, but interest rate rises lurk just around the corner

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The lack of affordable housing, particularly in London and the South East, is one of Britain’s most-told misery stories. But less is known about how these challenges differ for various household types and, perhaps more importantly, how people cope with them. New research by the Resolution Foundation seeks to deal with both of these questions. … Continued

Matthew Whittaker

To avoid squeezed households struggling, we must beware of premature interest rate rises

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Thursday’s interest rate announcement from the Monetary Policy Committee is unlikely to generate many headlines. “Bank does nothing for 65th straight month” is hardly a circulation-booster, even during silly season. But we can expect plenty of speculation alongside the announcement that the consensus among MPC members on holding rates will have been broken for the first time since … Continued

Once interest rates start rising, how can indebted households be helped through the painful transition?

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Whether it is this autumn, the New Year or shortly after next May’s election, everyone knows that interest rates are going to start rising sometime relatively soon. Yet despite the endless “guess the month” speculation about the precise timing of the first rise, little thought has actually been given to the bigger and longer-term question … Continued

Matthew Whittaker

The Bank’s conundrum countdown – Tightening policy in the shadow of a debt overhang

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If Mary Poppins taught us anything, it’s that a British bank is run with precision. But against a backdrop of rapidly changing and sometimes conflicting economic data, the balancing act currently facing the Bank of England requires a level of calibration rarely before seen. Clearly monetary policy must be tightened over the coming months and … Continued

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