One of the factors driving house price growth in many countries is foreign investor demand. Using new UK data, this column argues that foreign investment has had a significant positive effect on house price growth in the last 15 years. The effect is not limited to expensive homes but ‘trickles down’ to less expensive properties, and is stronger where housing supply is less elastic. Foreign investment is also found to reduce the rate of home ownership, but there is no evidence of an effect on the housing stock or share of vacant homes.
Filipa Sá, 04 January 2017
Kristin Forbes, Dennis Reinhardt, Tomasz Wieladek, 23 December 2016
Globalisation is in retreat, but while the slowdown in trade is widely recognised, what is more striking is the collapse of global trade flows. This column shows how banking deglobalisation is a substantial contributor to the sharp slowdown in global capital flows. It finds that certain types of unconventional monetary policy, and their interactions with regulatory policy, can have important global spillovers. Policies designed to support domestic lending may have had the unintended consequence of amplifying the impact of microprudential capital requirements on external lending.
Sascha O. Becker, Thiemo Fetzer, Dennis Novy, 31 October 2016
In the Brexit referendum on 23 June 2016, the British electorate voted to leave the EU. The vote is widely seen as a watershed moment in British history and European integration. This column asks why some areas vote to leave the EU, and others voted to remain.
Gylfi Zoega, 01 September 2016
Britain’s decision to leave the EU surprised many. This column examines the relationship between economic prosperity and voting behaviour in the referendum. The regions that have benefitted most from immigration and trade voted most strongly in favour of remaining, while the regions where people feel most threatened voted to leave. In other countries fearing a similar EU exit, economic policy should aim to ensure that the gains from trade and immigration are as widespread as possible.
Patrick Honohan, John FitzGerald, 12 August 2016
As the Irish economy is deeply integrated with the UK’s economy, Brexit poses especially severe challenges for Ireland. This column considers a future in which the legal basis for the UK’s economic relations with the EU, and hence with Ireland, is thrown into doubt. A UK withdrawal from the Single Market would raise questions relating to trade ‘re-diversion’, foreign direct investment, the Irish peace agreement, and assured access to British natural gas supplies.
Nicholas Crafts, 08 August 2016
Joining the EU raised the level of UK real GDP significantly. This column suggests that leaving the EU will very probably have a negative effect on UK GDP, but history does not tell us how strong this effect will be. However, history does suggest that the notion that there will be a faster rate of long-run trend growth facilitated by Brexit is not persuasive. The obstacles to better supply-side policy are, as ever, to be found in Westminster not in Brussels.
Marco Becht, Andrea Polo, Stefano Rossi, 20 July 2016
Many corporate acquirers impose losses on their shareholders. Conflicted or overconfident CEOs and boards embark on acquisitions that are not in the best interest of the owners of the firm. The governance tool of shareholder voting can represent a potential solution. This column shows that in the UK, where bids for relatively large targets require mandatory shareholder approval, shareholders gain when the transaction is conditional on a vote and lose when it is not. The evidence suggests that the vote puts a constraint on the amount the CEO can offer for the target.
David Vines, 15 July 2016
Whatever happens as a result of the UK’s referendum on EU membership, those in British politics, and in the British Civil Service, now face an enormous task. This column suggests how their hard work might actually lead to an outcome in which the UK remains a member of the EU. It describes a four-part action plan for those who would like to see this possibility kept open.
Richard Baldwin, 12 July 2016
The UK’s referendum on membership of the European Union is now history. But looking forward, it is useful to see how economists entered the debate. This column covers the highlights of VoxEU’s pre-Brexit efforts to disseminate research findings to a wider audience. It is, in a sense, a ‘playlist’ of pre-referendum columns and Vox Videos.
Jon Danielsson, Robert Macrae, Jean-Pierre Zigrand, 24 June 2016
Brexit creates new opportunities and new risks for the British and EU financial markets. Both could benefit, but a more likely outcome is a fall in the quality of financial regulations, more inefficiency, more protectionism, and more systemic risk.
Anatole Kaletsky, 22 June 2016
If the UK leaves the EU, what will happen to the UK economy? In this video, Anatole Kaletsky argues that Brexit would be economic suicide, or at least self-harm. A trade agreement that grants access to the Single Market implies conceding political sovereignty, contributing to the EU budget, and free movement of labour. This video was recorded during the “Economics of the UK’s EU Membership” conference organised by the National Institute of Economic and Social Research in February 2016 and held in London.
Karl Whelan, 20 June 2016
A large amount of business done in the City is linked to the UK’s membership of the EU. In this video, Karl Whelan discusses the impact of Brexit for the UK’s financial sector. He also argues that leaving the EU would take away the UK’s voice in shaping future legislation, which it would nonetheless have to follow in order to retain access to the Single Market. This video was recorded during the “Economics of the UK’s EU Membership” conference organised by the National Institute of Economic and Social Research in February 2016 and held in London.
Nicholas Crafts, 15 June 2016
If the UK leaves the EU, what's next for the economy? In this video, Nicholas Crafts of the University of Warwick discusses the impact of EU membership on the British economy. The type of agreement the UK would reach outside the EU is most important, and the risks outweigh the potential gains. This video was shot during the “Economics of the UK’s EU Membership” conference organised by the National Institute of Economic and Social Research (NIESR) on 23 February 2016 and held in London.
John Springford, 14 June 2016
To the EU’s critics, the cost of regulations emanating from Brussels have become so great that they outweigh the – as they see it – modest benefits of single market membership. In this video, John Springford (CER) tests this claim against the evidence. He points out that the EU’s regulations and directives reduce the cost of trade between member-states – and that critics fail to take that into account. This video was recorded in June 2016 during the “Economics of the UK-EU Relationship” workshop at Brunel University London.
Corrado Macchiarelli, 14 June 2016
The history of European integration has been characterized by several ‘stops-and-goes’ with considerable support on political grounds. In this video, Corrado Macchiarelli (Brunel) discusses the role of European integration for the future of the EU-UK relations. Integration, consistent with the idea of ‘completing’ the European Monetary Union (hence, a ‘Genuine Economic and Monetary Union’- GEMU) would affect the UK as well, irrespective of whether it will withdraw from the EU. Costs and benefits of EU membership should hence take GEMU into account. This video was recorded in June 2016 during the “Economics of the UK-EU Relationship” workshop at Brunel University London.
Peter Egger, 14 June 2016
The European Union (EU) spends a large share of its budget on regional policy, what are the implications for the UK? In this video, Peter Egger (ETH Zurich) concludes that overall regional transfers across the EU give value for money. However, there is room for further improvement in the design of EU regional transfers to make them more effective. He argues UK regions have benefited from EU regional policy over the last decades and that there is uncertainty for those regions that benefit from substantial amounts of EU funding (e.g. Cornwall) over what would replace those funds after an eventual Brexit. This video was recorded in June 2016 during the “Economics of the UK-EU Relationship” workshop at Brunel University London.
Randolph Bruno, 14 June 2016
European Union facilitates the inflows of Foreign Direct Investment into its members. In this video, Randolph Bruno (UCL) discusses the results of his research on how inflows of investment capital from foreign countries (FDI) into the EU Members has been on average 28 percentage points higher than non-EU members in the 1985 to 2013 period. He also argues that the UK is one of the countries for which the effect is higher than this average. This video was recorded in June 2016 during the “Economics of the UK-EU Relationship” workshop at Brunel University London.
Angus Armstrong, 14 June 2016
How does the current UK financial infrastructure contrast with how such infrastructure might look like post Brexit? In this video, Angus Armstrong (NIESR) focuses on the role of financial services. He noted that the UK has a systemically large domestic banking system (different from e.g. Luxembourg) so regulation plays differently. He highlighted the issue of the of emergency liquidity assistance provision. Unusually, Eurozone infrastructure extents to the EEA, which allows the UK to be centre of Euro wholesale finance. This video was recorded in June 2016 during the “Economics of the UK-EU Relationship” workshop at Brunel University London.
Nicholas Crafts, 14 June 2016
The impact of EU membership on British growth performance both past and future is somewhat controversial. In this video, Nicholas Crafts (Warwick) gives his assessment of the evidence. He suggests that the UK’s entry into the EU in the 1970s had strong positive effects in particular because it addressed issues of weak competition but that Brexit now would lower the income level through adverse effects on trade without addressing any of the 21st-century supply-side problems that hold UK growth back. This video was recorded in June 2016 during the “Economics of the UK-EU Relationship” workshop at Brunel University London.
Nauro Campos, Fabrizio Coricelli, 14 June 2016
The partnership between the UK and the EU has famously been described as “awkward”. A benefit of the Brexit debate is that it has spawned an enormous amount of research addressing issues surrounding the relationship that have been taken for granted for probably too long. This column takes stock of new research presented at a recent conference on the UK-EU relationship.