Thursday 19 October 2023

Riding the economic rollercoaster

Is Britain’s macroeconomic policy framework fit for purpose?

Britain’s macroeconomic policy that the Treasury and Bank of England have got used to is crisis management – from a financial crash to a global pandemic and a huge inflation spike. Both have adopted new approaches to supporting the economy, going far beyond textbook cuts to interest rates. Today the legacy is higher levels of debt, amid huge uncertainties about the future path of interest rates. But Britain’s macroeconomic policy framework – from the Chancellor’s fiscal rules to the Bank’s inflation target – remain largely unchanged this century.

Do today’s higher interest rates mean monetary policy makers have more scope to support the economy in a downturn? Or if a world of ultra-low interest rates returns, what does it mean for monetary policy effectiveness and inflation targeting? Can the Treasury repeat the likes of furlough or caps on energy prices when the next crisis hits? And would it take to meet both main parties’ commitment to see debt falling as a share of GDP – to fix the fiscal roof when the economic sun eventually gets round to shining once again?

The Resolution Foundation is hosting an in-person and interactive webinar – as part of The Economy 2030 Inquiry, in partnership with the Centre for Economic Performance at the LSE, and funded by the Nuffield Foundation – to debate and answer these questions. Following a presentation of the key highlights from new research on the big fiscal and monetary policy challenges facing Britain in the decade ahead, we will hear from leading experts on how to confront them.

The event will be open for people to physically attend, alongside being broadcast via YouTube and the Resolution Foundation website. Viewers will be able to submit questions to the panel before and during the event via Slido.