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Budget talk
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; […]
Inequality & poverty
Have government measures been protecting the UK’s most vulnerable?
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 […]
Business, big & small
How might Brexit affect the English Premier League?
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 […]
Jobs, work, pay & benefits
Update: How is the coronavirus crisis affecting gig economy workers?
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 […]
Health, physical & mental
What do social media reveal about our emotions during the Covid-19 crisis?
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. […]
News
Perspective matters
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 […]
Crime & policing
Did the vote for Brexit lead to a rise in hate crime?
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 […]
Data stories
What do payroll employment data reveal about UK job losses?
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 […]
Prices & interest rates
Can central bank balance sheets handle the challenges of Covid-19?
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 […]
Prices & interest rates
How has Brexit affected the value of sterling?
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. […]
News
What comes next?
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 […]
Charities & volunteering
Is coronavirus distracting us from other pressing social concerns?
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 […]
Banks & financial markets
How can green finance foster a sustainable recovery after Covid-19?
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 […]
Nations, regions & cities
Zoomshock: how is working from home affecting cities and suburbs?
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 […]
News
Policy and the pandemic
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 […]
Nations, regions & cities
Has devolution led to different outcomes during the Covid-19 crisis?
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 […]
Inequality & poverty
Update: what are the effects of Covid-19 on poverty and inequality?
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, […]
Business, big & small
Brexit: what are the risks and opportunities for UK competition policy?
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 […]
Jobs, work, pay & benefits
How are robots affecting jobs and pay?
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 […]
News
Markets disrupted
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 […]
Energy & climate change
How green are central banks?
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 […]
Jobs, work, pay & benefits
What’s happened in the UK labour market during the Covid-19 recession?
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 […]
Prices & interest rates
How has the Fed responded to the Covid-19 recession?
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. […]
Trade & supply chains
How is Brexit affecting Northern Ireland’s economy?
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 […]
Banks & financial markets
GameStop: what is going on with prices in the US stock market?
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 […]
News
Devil in the detail
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 […]
Schools, universities & training
Should students apply to university after they’ve got their exam results?
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 […]
Attitudes, media & governance
Safety from infection: how should Covid-19 policy make the trade-offs?
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, […]
Trade & supply chains
How is Brexit affecting Scotland’s fishing industry?
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. […]
Business, big & small
What may happen to firm-level productivity in the UK after Covid-19?
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 […]
News
History has its eyes on us
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 […]
Lessons from history
Past plagues: why did some create conflict while others promoted cohesion?
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 […]
Schools, universities & training
#economicsfest: Does economics need to be ‘decolonised’?
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 […]
In conversation with Wendy Carlin
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.
Nations, regions & cities
Why are supermarket shelves in Northern Ireland empty?
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 […]
Schools, universities & training
How can policy-makers and parents support home learning during lockdown?
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 […]
News
The end of the beginning?
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 […]
Business, big & small
Have government policies helped small firms cope with coronavirus?
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 […]
Lessons from history
How do large-scale pandemics affect inequality?
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 […]
Energy & climate change
‘Backyard wildlife’: has the pandemic reconnected us with nature?
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 […]
Public spending, taxes & debt
Should a UK wealth tax be devolved?
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. […]
News
High costs of indecision
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 […]
Science, technology & innovation
How is Covid-19 affecting firms’ adoption of new technologies?
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 […]
Schools, universities & training
How should we assess school students now that exams have been cancelled?
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 […]
Science, technology & innovation
What does 95% effective mean for a Covid-19 vaccine?
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 […]
Banks & financial markets
Are Bitcoin and other digital currencies the future of money?
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 […]
Inequality & poverty
What do school closures mean for social mobility?
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 […]
Data stories
How has the cost of Christmas dinner changed over the years?
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 […]
Science, technology & innovation
What have economists been writing about in the time of pandemic?
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 […]
Prices & interest rates
Do we need a new constitution for central banking?
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 […]