Economics Observatory | Questions and answers about coronavirus and the UK economy

How can UK policy-makers make homes more affordable?

Housing in the UK has become seriously unaffordable; the problem is likely to get worse; and younger people are being hit the hardest. Reforms that could be effective in solving the crisis are considered politically infeasible – while popular policies are ineffective or, worse, counterproductive.

Banks & financial markets

Why did Lehman Brothers fail?

In the wake of recent bank failures in Switzerland and the United States, a retrospective on the 2008 fall of Lehman Brothers is timely. To avoid another banking collapse, it’s worth looking at what caused Lehman to fail and trigger the most severe financial crisis in history.

Banks & financial markets

Swiss banks now and in the global financial crisis: is this time different?

Before the spectacular blow-up of Credit Suisse earlier this year, Switzerland’s other big bank, UBS, had to be rescued in equally remarkable circumstances during the global financial crisis. While reforms since then have made the world’s banking system safer, it is by no means immune from crises.

Attitudes, media & governance

How did Adam Smith understand self-interest?

Both Adam Smith’s work and modern behavioural economics show us how our decisions are influenced by perceptions of the motivations and moral judgements of others.

Prices & interest rates

What’s happening to UK inflation and interest rates?

At the latest meeting of the Monetary Policy Committee, the Bank of England left its policy interest rate unchanged – at 5.25% – the first time since November 2021 that the cost of borrowing wasn’t raised. The decision follows new data showing consumer price inflation for the year to August at 6.7%.

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What was the ideal economic system for Adam Smith? His writings disapprove of high profits and advocate regulation, a minimum wage and well-designed taxes.

Aid & international development

Asylum seekers in Europe: where do people go and why?

As millions of people cross dangerous terrain to seek refuge in Europe, understanding the factors that drive them to go to particular places is crucial. It is also important to assess whether certain policies in destination countries deter or attract asylum seekers.

Energy & climate change

How should a national energy efficiency policy be targeted ahead of winter?

Rising gas and electricity prices have affected millions of UK households and increased rates of energy poverty. Energy efficiency policies should make a priority of support for the most vulnerable, particularly low-income households and those with disabilities or long-term illness.

Attitudes, media & governance

Principles of motion: how should policy-makers think about human behaviour?

Effective policy-making must take account of potential unintended consequences of new measures, rather than presuming that the responses of individuals and organisations will follow a predetermined path like pieces on a chessboard. Adam Smith’s policy advice resonates strongly today.

News

After the fall

The global financial crisis has served as a benchmark for the many subsequent challenges for the world economy. It also raised questions about economists’ ability to communicate effectively with the public, something that ECO and the wider research community have since sought to improve.

Lessons from history

Scottish Enlightenment: what were the influences on Adam Smith’s thought?

Newtonian principles, Stoic philosophy and post-Calvinist religious thinking all shaped the ideas of Adam Smith – and through him, they underpin modern economics.

Jobs, work, pay & benefits

Should the UK government get active about economic inactivity?

Concerns about a rise in economic inactivity have prompted new policies aimed at discouraging early retirement and encouraging the labour force participation of women with young children. Such interventions would be more cost-effective if targeted at particular disadvantaged groups.

Business, big & small

The hollow corporation: what does today’s division of labour look like?

Adam Smith explained the gains from workers in a pin factory specialising in their tasks. Specialisation today looks very different, with many businesses focused on just a single link in the global supply chain.

Data stories

What do the latest data tell us about UK wage growth?

While wages are growing faster than expected, real take-home pay is falling across all UK regions and nations. In most parts of the country, median pay is growing faster than average (mean) pay, reflecting, in part, post-pandemic competition for lower paid roles.

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