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Newsletter from 5 March 2021 This time last year, early March, was when stories of a distant disease suddenly began to feel much closer to home. Twelve months on, we’re all marking off personal anniversaries: last time on a plane or in a crowded restaurant; last time at the office or an in-person business meeting; […]

The economic effects of the pandemic are particularly damaging for the most vulnerable individuals and households. Two types of vulnerability stand out. First, there are people whose financial position before Covid-19 made them particularly vulnerable to hardship from income shocks. These include: People living in destitution or deep poverty: One estimate indicates that 2.4 million […]

Football at the highest level is a lucrative business. In 2018/19, the last full season unaffected by Covid-19, the ‘Big Five’ – the top-tier leagues in England, France, Germany, Italy and Spain – grossed €17 billion in revenue (Deloitte Sports Business Group, 2020). The 20 clubs in the English Premier League had combined revenues of […]

The potential short- and long-term effects of the pandemic on the gig economy were discussed here in August 2020. Now, nearly a year after the first lockdown began, what more can we say? In particular, will the recent Supreme Court ruling on the status of Uber drivers influence the way that the gig economy responds […]

Time spent on social media has increased during the pandemic. A growing body of research linking platforms such as Twitter, Facebook, LinkedIn and Instagram to human emotions has made them a useful tool for monitoring public wellbeing (for example, McDool et al, 2020). Similarly, the valuations that people place on social media have increased markedly. […]

Newsletter from 26 February 2021 To solve any difficult problem, there is value in looking at things from a range of perspectives. Using different measures and methodologies can help us to draw nuanced conclusions, and a balanced approach is critical for designing good policy. With Covid-19, it’s no different. Arguably, this is all the more […]

The UK’s referendum vote to leave the European Union (EU) was followed by an increase in race and religious hate crime of 15-25% in England and Wales. Hate crime is defined as ‘any criminal offence which is perceived, by the victim or any other person, to be motivated by hostility or prejudice towards someone based […]

New labour market data for the UK were released yesterday – and as has been the case throughout the pandemic, headline measures such as the unemployment and employment rates do not reflect the full scale of the economic crisis that we are seeing elsewhere (for example, in GDP data). The main reason for this is […]

Central banks fall into different groups. This article mainly considers a specific type: the central bank of a sovereign nation with its own currency, its public debt denominated in its own currency and a floating exchange rate. This includes the US Federal Reserve (‘the Fed’), the Bank of Japan, the Bank of England, the People’s […]

At the start of 2021, the pound was approximately 15% weaker relative to the euro than it was on the eve of the referendum on the UK’s membership of the European Union (EU) in June 2016. Sterling was also 20% weaker than it was when the EU Referendum Act received Royal Assent in December 2015. […]

Newsletter from 19 February 2021 More than 16 million people have received a first vaccination dose for Covid-19, and it seems likely that the UK’s schools will re-open not too long after the half-term holidays. So perhaps now is a good time to look up from our immediate health and economic concerns, and think about […]

Covid-19 is naturally at the forefront of our concerns right now, but there are several other pressing issues affecting our current and future wellbeing. Overarching social objectives featured in the United Nations Sustainable Development Goals (SDGs) include alleviating global poverty, improving the living conditions of millions of people in less developed countries, addressing the climate […]

Over the past decade, it has become clear that the financial sector can play a pivotal role in creating a more sustainable economy. In recent years, a diverse range of financial institutions and investment organisations has shown increasing awareness of the environmental, social and governance (ESG) issues facing firms, investors and the wider economy. Among […]

For many people, Covid-19 has led to an unprecedented shift in where they work – from the office to their homes. This has inevitably changed where people spend their money too. Workers who frequented cafes and shops near their offices before the pandemic will have found alternatives near home. Other spending – such as on […]

Newsletter from 12 February 2021 This week Economics Observatory writers looked to the future. With vaccination efforts running well across the home nations (chart below), the post-pandemic era is on the horizon. Add Brexit into the mix and 2021 looks set to be a turning point for the UK economy. Yet the themes we covered […]

Opinion polls in Scotland suggest that many people think that the Scottish government has dealt with the pandemic more effectively than the UK government (BBC News, 2020). It is unclear whether this perception has been driven by a marked difference in outcomes between the devolved nations – particularly Scotland – during this crisis. It is […]

It is too soon to say with certainty what will be the overall impact of the crisis on measures of poverty or inequality in the UK. High-quality data on household incomes of the sort that are used to estimate income inequality and rates of relative poverty tend to be released with long lags. For example, […]

Competition is a good thing. It brings new ideas, stimulates innovation and keeps prices low and quality high. By making goods and services more affordable, it can also reduce inequality. But it needs to be fair – and that is why we need vigilant competition enforcers to make sure that the power held by big […]

Over the past 40 years, earnings growth in the United States has been slow and unequal. Between 1980 and 2017, wages rose among male workers educated to degree level but fell among men without a degree by 10-20% in real terms (taking account of inflation). This is not a uniquely American problem: the pay gap […]

Newsletter from 5 February 2021 The Economics Observatory was set up to answer questions from policy-makers and the public about coronavirus and the UK economy. Many of the things we’ve been asked about so far are long-term challenges raised by the pandemic, the recession and their aftermath: What will happen to big cities after our […]

It is now clear that environmental degradation demands a sustainable approach across all sectors. As a result, debate over the role of public institutions in all matters ‘green’ intensifies. This discussion is a sensitive one for central banks, which are traditionally mandated to act in a politically neutral way. One of the most pressing questions […]

Over the ten months since the first lockdowns in response to the pandemic, labour markets around the world, including in the UK, have been characterised by large falls in employment and self-employment, record rises in unemployment claims and massive falls in hours worked. There is a range of ways that employers can react to negative […]

In the second quarter of 2020, the US economy recorded its steepest quarterly drop in economic output since comparable records began (the post-war period). On 8 May, the Bureau of Labor Statistics reported the official unemployment figure of 14.7%, the highest level recorded since 1941, with an unprecedented 20 million jobs lost in April alone. […]

Nineteenth-century Prussian chief of the general staff Helmuth von Moltke declared, ‘No plan survives contact with the enemy’. Only weeks after the end of the Brexit transition period on 31 December 2020, plans for handling Brexit in Northern Ireland (NI) have been bruised by contact with reality. Northern Ireland’s trade flows Figure 1 summarises NI’s […]

Over the past few weeks, shares in struggling US companies whose business has been hurt by the pandemic have soared in value, alongside unprecedented price volatility and trading volumes. Chief among these companies is GameStop, an American high street shop that sells consoles and games. The price of shares in GameStop increased from about $20 […]

Newsletter from 29 January 2021 It being Friday, the main course in this week’s newsletter is fish. And if you’re going to talk about the economics of fish in the UK, you’d better start with Scotland. It’s the country’s piscatorial powerhouse, making up almost two-thirds of UK output. Share of UK gross value added in […]

Applications for entry to UK university courses for autumn 2021 close on Friday 29 January, after a brief extension was granted due to the closure of schools at the start of January and the cancellation of exams. While many will have applied (and had offers) prior to the announced closures and cancellations, this period of […]

Policy decisions during a pandemic involve difficult trade-offs. Should younger people have to sacrifice their freedoms, and sometimes their livelihoods, to protect vulnerable elderly people from harm? Should schools close (as in the UK’s spring and winter lockdowns) or stay open (as in the autumn lockdown)? In the extreme, if NHS capacity limits are exceeded, […]

Recent weeks have seen key parts of the UK’s fishing industry facing challenges arising from post-Brexit border delays with the European Union (EU), which have been affecting routes to market for fresh seafood. The issue has attracted particular controversy in Scotland, where the First Minister has accused the UK government of ‘selling out’ the industry. […]

A key policy question is how the economic crisis might affect long-term productivity in the UK. Might it usher in faster productivity growth or weaken the outlook? In the past, productivity has tended to recover quite well after the initial onset of a recession in the UK. But the experience of the 2008/09 recession following […]

Newsletter from 22 January 2021 Wednesday’s regime change in the United States was greeted with a sigh of relief around the world, not least for the new administration’s commitment to a comprehensive programme for tackling the pandemic both at home and abroad. The American plan for rescue and recovery shows clearly that we now have […]

The Covid-19 pandemic and its fallout have taken the world by surprise. Yet the history of pandemics and epidemics offers an essential window into how the spread of pathogens can shape society and human behaviour. As the coronavirus outbreak has unfolded, and particularly given emerging evidence of animus and discrimination against certain groups accused of […]

In the wake of the murder of George Floyd in Minneapolis in the summer of 2020 and the protests that followed, academic economists, along with others in higher education, have faced a reckoning regarding racism and Western (Eurocentric) biases within their discipline. It was against this backdrop that we had a pair of events led […]

Michael McMahon, Professor of Economics at Oxford University, interviews Professor Wendy Carlin, Professor of Economics at UCL, on macroeconomics, teaching, and widening diversity in the field.

The start of 2021 has seen supermarkets in Northern Ireland struggling to fill their shelves. Lorries delivering goods to the region have experienced significant delays, and local businesses are having difficulty sourcing new stock. Why is this happening? On 1 January 2021, the UK completed its exit from the European Union, with a free trade […]

In January 2021, schools in the UK have again switched to online learning for most children, due to the resurgence of Covid-19 across the country. Consequently, there is a renewed emphasis on ensuring that children receive the best possible education while staying at home. There are concerns that the impact of further school closures will […]

More likely, we’ll come to see it as the end of the beginning. The pandemic will be with us for years, if not decades. One simple reason is the debt – government, corporate and household – taken on to get through the lockdowns is not going away. Rising indebtedness and what to do about it […]

The Covid-19 crisis has severely affected firms of all sizes, but small and medium-sized enterprises (SMEs) have been hit the hardest. These firms tend to be concentrated in sectors directly affected by health measures (for example, retail and in-person services); they are more likely to be credit-constrained; and they often have lower levels of sophistication […]

Many fear that Covid-19 might lead to increases in poverty and economic inequality. At the same time, some draw on the historical experience of the Black Death in the fourteenth century to argue that major pandemics can instead lead to less unequal societies. But subsequent plagues and other epidemics have failed to produce these effects […]

Since the onset of the Covid-19 pandemic, people across the world have endured extended periods of lockdown. Through these intermittent phases of economic suppression and closure, expenditure habits have changed substantially. Naturally, this has included a greater shift to online shopping and purchasing products that can be enjoyed at home, while holidays, travel and indoor […]

There has been significant recent interest in the idea of establishing a broad-based UK tax on the ownership of most (or all) types of asset, net of any debt – see, for example, the report and associated papers of the Wealth Tax Commission. Some aspects of such a wealth tax are conducive to being devolved. […]

Newsletter from 8 January 2021 The UK is facing a bleak start to 2021. Daily new coronavirus cases and hospital admissions are surging to levels far beyond last year’s first peak; and daily Covid-19 deaths are over a thousand for the first time since the spring. A Financial Times survey of nearly one hundred economists (including several Economics Observatory lead […]

In 1665, just like today, the Great Plague created the need for social distancing in universities. Isaac Newton had to return from Trinity College, Cambridge, to his childhood home where, in a ‘year of wonders’, he went on to formulate differential calculus and a theory of universal gravitation. But even if bad times can foster […]

While the uncertainties of a global pandemic make this one of the most volatile periods of education policy in history, if there is one lesson we should all have learned since last March, it is that indecision is costly. This has proved true repeatedly for public health and looks just as relevant for education. As […]

On 9 November 2020, the world woke to the uplifting news that a safe and effective vaccine for Covid-19 was within reach. Pfizer and BioNTech reported results of their clinical trial for the vaccine to justifiably great acclaim. The vaccine was said to be 95% effective, based on outcomes observed so far. This was followed […]

Bitcoin is a decentralised virtual currency or ‘cryptocurrency’: in the words of its anonymous founder, ‘a purely peer-to-peer version of electronic cash [that allows] online payments to be sent directly from one party to another without going through a financial institution.’ When you own Bitcoin, you own the ‘key’ (or password) to an ‘address’ (or […]

Learning losses have been felt disproportionately by poorer pupils, both during the closure of schools in the initial lockdown and subsequently during the significant education disruptions of the autumn and winter. Extended school closures in early 2021 are likely to widen educational inequality. There is widespread public support for keeping schools open and reforming exams […]

Christmas in 2020 is unlike any in living memory. With a new strain of the coronavirus spreading rapidly, travel is now largely banned, separating families. Carols will be sung, with delays, on Zoom. But one thing that seems to be holding up is Britons’ propensity to shop. Consumer spending has varied by region but overall […]

In the world of academic economics, there are strong incentives to write articles for peer reviewed journals. Among these, there is a narrow hierarchy, with the ‘top five’ general journals valued considerably above others, even leading journals for specific fields such as environmental or health or international economics. This narrow funnel and distorted incentive structure […]

Fifteen years ago, the world of central banking seemed sober, calm and apolitical. Since then the financial crisis, euro meltdown and now Covid-19, together with persistently weak underlying growth, have reinjected politics into central banking, creating dilemmas and tensions. On the political left, there are calls for ‘People’s QE’ and for central banks to cure […]