The logical conclusion from Sir Mervyn King’s reasoning is that this new UK liquidity push will be just as useless as that of the European Central Bank.I suspect this is indeed what the Governor really believes, and that he has been forced into the so-called “funding for lending” operation by a desperate Treasury.
Strange that the eurozone crisis should be “killing” the UK recovery, as the Chancellor puts it, while leaving the major economies that are actually members of the single currency relatively unscathed.
The usually impeccable reasoning of Jonathan Portes of the NIESR doesn’t wash here. It makes no more sense to say that means-testing Winter Fuel Payments must imply means-testing of the Basic State Pension, than it does to argue that the universal Basic State Pension implies that the Pension Credit top up benefit must be made universal, at impossible expense.
Herman Van Rompuy’s adviser went on one of the UK’s premier news programmes last night and managed to mislead the financial markets and the public not once, but twice.
The Coalition might argue that our exporters would have made even more of a contribution if the Europeans had sorted things out. But on the Office for Budget Responsibility’s forecasts, trade has actually come in better than expected.
If there is a view that there should be no universal benefits for pensioners, so we stop “wasting taxpayers’ money” on the rich ones, then that is a perfectly consistent and logical position. But its main target should be the basic state pension.
Let’s imagine that the Fiscal Compact was up and running and that Britain had signed up. That would mean that the Government would technically be liable for big fines for failing to hit those Commission mandated targets. And if it wanted to avoid those fines it might have had to tighen fiscal policy further, by about 0.5% of GDP per year (or around £7.5bn)
For those of a Keynesian persuasion, Paul Krugman’s visit to Britain this week is more exciting than the Diamond Jubilee and the Olympics put together. My interview with the economics Nobel laureate for the Indy can be found here. But for those of a wonkish nature who would like to hear Krugman’s views on subjects such as NGDP targeting and the Phillips Curve the full transcript is below.
Perhaps because all things European tend to be unpopular here in Britain, we generally assume that Germany won’t be willing to pay the bill for the survival of the single currency. It might not. But, the latest Pew poll suggests we shouldn’t be so sure.
What’s going on? Why haven’t UK exports surged on the back of a weak pound as most economists expected they would?
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