Ethan Ilzetzki, 09 February 2021

Over the past year, concerns about inflation have reappeared. This column presents evidence on inflation expectations from the January 2021 survey by the Centre for Macroeconomics. The panel of experts is split between those predicting that UK inflation will be roughly at its current target and those believing that inflation will be above target in the upcoming decade. A smaller minority worry that the UK growth rate will be too low for the Bank of England to stimulate inflation. Beyond the growth rate of the economy, additional factors that panellists are monitoring to project inflation include the effects of Brexit, rising public debts, and global factors.

Ethan Ilzetzki, Benjamin Moll, 25 November 2020

On 5 November, the UK entered its second lockdown in an attempt to contain the spread of Covid-19. This column reports on the latest CfM survey, in which the majority of the panel of assessed that lockdowns have caused limited economic damage beyond what the pandemic itself would have caused unabated, and that the economic costs of the current lockdown are limited relative to the milder measures employed this summer. Nearly a fifth of the panel believes that the UK economy is in fact better off due to lockdowns, beyond the public health benefits of these measures. About a third of respondents believes that no trade-off exists between lives and livelihoods and that health and economic outcomes in fact go hand in hand, especially when better policies are taken into account, a third believes there is a small trade-off, and the remaining third that the trade-off is larger.

Ethan Ilzetzki, 06 July 2020

The UK economy is suffering its worst recession in centuries, with national income declining and unemployment rising at unprecedented rates. This column reports on the latest Centre for Macroeconomics survey, which reveals that despite this worrisome news, the panel is optimistic that the UK economy will recover to its pre-pandemic trend within five years or less, no worse than past UK recessions. Panellists emphasised that these predictions depend on the government effectively containing the spread of the virus and not reverting to austerity policies following the pandemic. The panel was split on the biggest risks to the pace of recovery, with firms’ productive capacity, scarring effects of unemployment, and a slow demand recovery cited as prominent concerns. 

Ethan Ilzetzki, 11 June 2020

Public debt has risen to unprecedented peacetime levels, due to policies put into place to address the economic fallout from COVID-19. Nevertheless, as this column reveals, the Centre for Macroeconomics panel was nearly unanimous that the Treasury should not take any action to decrease the deficit in the upcoming budget. The panel is split on when it would be wise to publicly announce long-run plans to address the deficit and the debt. The majority of the panel supports a mix of financing options when action is taken, with tax increases receiving strong support and not a single panellist supporting public spending cuts.

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