Ethan Ilzetzki, Jason Jia, 02 April 2021

In his Spring Budget, UK Chancellor Rishi Sunak announced a super-deduction that allows companies to deduct 130% of expenses on capital on most investments on plant and equipment. This column reveals that the majority of the CfM panel of experts on the UK economy think this super-deduction will moderately aid the UK’s recovery from the Covid recession, but that the announced corporate tax increases also announced in the Budget will do moderate harm. Most panellists believe that the government is moving too fast on deficit reduction. 

Romesh Vaitilingam, 08 February 2021

The UK’s exit from the EU was finally completed on 1 January 2021. The IGM Forum at Chicago Booth invited its panels of leading European and US economists to express their views on the likely long-term effects of Brexit on both the UK economy and the aggregate economy of the remaining 27 EU members. As this column reports, a strong majority (86% of the panellists) agrees that the UK economy is likely to be at least several percentage points smaller in 2030 than it otherwise would have been. Views are more divided on the EU-27 economy: nearly a quarter of respondents agree that it will be at least several percentage points smaller in 2030 than it otherwise would have been; but more than a third are uncertain; while 41% do not expect the impact to be that strongly negative.

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. 

David Bholat, 02 July 2020

Machine learning and artificial intelligence (AI) are at the heart of current transformations that some commentators have dubbed the ‘Fourth Industrial Revolution.’ The Bank of England, CEPR and Imperial College recently organised a virtual event to discuss how machine learning and AI are changing the economy and the financial system, including how central banks operate. This column summarises key topics discussed during the event and introduces videos recorded by some of the presenters, including Stuart Russell, Alan Manning, and the Bank of England’s Chief Data Officer, Gareth Ramsay. 

Nicholas Bloom, Philip Bunn, Scarlet Chen, Paul Mizen, Pawel Smietanka, 25 February 2020

After months of political stalemate, Boris Johnson’s decisive victory in the December UK general election cleared the way for the UK to leave the EU. This column uses data from the Decision Maker Panel, a monthly survey of CFOs from around 3,000 UK businesses, to show that Brexit-related uncertainty has fallen since the election. The fall in uncertainty has been larger among more domestically focused businesses, however, and substantial uncertainty remains around the future trading relationship between the UK and the EU. There are some signs that this fall in uncertainty may lead to a modest pickup in investment, but it is still early days. 

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In collaboration with CEPR and the Brevan Howard Centre, Imperial College, the Bank of England is hosting a research conference on “the impact of machine learning and AI on the UK economy.” The purpose of the conference is to stimulate academic research and public debate on how machine learning and AI will impact issues that matter to the Bank of England’s policy objectives.

Jonathan Portes, Giuseppe Forte, 05 January 2017

The various projections of the impact of Brexit on the UK economy that were produced during the referendum campaign omitted the economic impact of changes in migration to the UK. This column presents plausible scenarios for future migration flows and estimates of the likely impacts. The potential negative impact of Brexit-induced reductions in openness to migration on the UK economy could well equal that resulting from Brexit-induced reductions in trade.

Thomas Sampson, Swati Dhingra, Gianmarco Ottaviano, John Van Reenen, 02 June 2016

The ‘Economists for Brexit’ recommend that the UK leaves the EU. Rather than striving for new trade deals, they recommend unilaterally abolishing all trade protection, and predict a subsequent boom of 4%. This rosy forecast stands in sharp contrast with all other economic analysis. This column explains how the modelling on which the group bases its recommendation, from Professor Patrick Minford, fails to grasp basic facts about the nature of international trade and product standards. A more realistic assessment shows that ‘unilateral trade liberalisation’ does very little to offset the steep decline in UK living standards that would follow Brexit.

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