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In the last three decades, stock repurchases have become a popular way of returning money to shareholders in the UK, the United States and continental Europe. Yet prior to 1981 in the UK and 1982 in the United States, it was illegal for companies to buy back their own shares. And during the Covid-19 crisis, […]

Newsletter from 9 April 2021 Economics is often seen as stuck in its ways, a discipline that clings to old ideas – perfect markets, for example – and the old models that embed these unrealistic assumptions. But economics and economies change, in the past 18 months perhaps more than ever. This week a key theme […]

The world is unequal both in its downs and its ups: the costs of recessions hit some harder than others, the benefits of economic growth lift some and leave others behind. Economy-wide events therefore affect inequality between the economy’s inhabitants. In turn, how the overall economy recovers after recessions and grows in the long-run depends […]

Unfortunately, very timely and reliable data on the overall state of Northern Ireland’s economy are limited. The likelihood is that it is broadly tracking UK-wide trends: a severe output decline during the first lockdown (23 March to late June 2020) reaching the bottom of the trough in April and early May, followed by a recovery […]

Part of the report of the Commission on Race and Ethnic Disparities (known as the Sewell Report, 2021) is about how ethnic minorities fare in the UK labour market compared to white people and how disparities in pay, employment and unemployment have changed over time. The report gives the impression that disparities are falling over […]

The Covid-19 pandemic has changed both the composition and level of crimes in England and Wales. With more people staying at home, and many becoming unemployed or having to shut their businesses, the incentives to commit crimes have changed. So too has the probability of being caught by the police, as empty streets have made […]

Newsletter from 1 April 2021 The seed of an idea that grew into the Economics Observatory was first planted and nurtured in a series of conversations exactly a year ago. In the wake of the pandemic, lockdown and what already looked likely to be the deepest recession in living memory, there was a growing sense […]

The US Federal Reserve (known as ‘the Fed’) is in the process of changing the way it conducts monetary policy. Following an extensive public review of its policy framework, the Federal Open Market Committee (FOMC) released a revised Statement on Longer-run Goals and Monetary Policy Strategy in August 2020. This included two significant revisions that […]

Since the first announcement that a vaccine effective against Covid-19 had been developed, it has offered hope as a way out of the pandemic. New vaccines have been approved since then, but still there are not currently enough vaccines to go round. When considering how to allocate limited numbers of doses, there are questions of […]

Becoming self-employed allows workers to enjoy the flexibility of being ‘their own boss’. But striking out on your own also means that you no longer have an employer to protect you from economic shocks when they come around. Covid-19 – by some measures the UK’s greatest economic shock for over a hundred years – has […]

Newsletter from 26 March 2021 This week’s headlines remind us just how connected the world is – and the importance of cooperation across countries to tackle global challenges. Even as UK coronavirus cases fall and vaccination numbers rise, a ‘third wave’ of the pandemic sweeping through Europe threatens the return of international travel. And despite […]

New trading arrangements between the UK and the European Union (EU) are now in place as part of the trade and co-operation agreement signed in December 2020. They are already having a profound impact on the Welsh economy, with the effects being felt economy-wide as well as individually within key sectors. The EU is the […]

On 3 March 2021, the Office for National Statistics (ONS) released data on ‘Sickness absence in the UK labour market: 2020'. The report reveals whether sickness absence among UK workers has risen or fallen in 2020. It may have risen due to direct effects of the pandemic. Equally, it may have fallen if other illnesses […]

Firm-level decisions in response to shocks like coronavirus play a key role in determining the overall impact on the aggregate growth of trade and output. Firms choose what goods or services to export, how much to export and to which foreign markets they sell – and these decisions can have big overall effects. Firms’ reactions […]

Fewer cases of Covid-19 have been reported in Africa compared with the United States and Europe (see Figure 1). It has been suggested that this is a result of the lessons learned from the fight against Ebola during the 2014-16 outbreak (predominantly in West Africa). For example, the two viruses have different causes and consequences, […]

Newsletter from 19 March 2021 Exactly one year ago, the Prime Minister announced that the UK could ‘turn the tide’ on the coronavirus crisis within 12 weeks. Those weeks have now turned to months – and while we may have grown strangely accustomed to life at home, few could have imagined that a year on […]

Covid-19 has exacerbated the existing inequalities between men and women in terms of economic, health and educational outcomes. Examples of the disproportionately negative effects of the crisis on women are seen around the world (Alon et al, 2020; Adams-Prassl et al, 2020). But women in low and middle-income countries have faced specific additional challenges. For […]

Between the outbreak of the coronavirus pandemic in the UK in March 2020 and the end of the year, two of the richest people in the world both saw their net worth skyrocket. Jeff Bezos, founder of Amazon, became $72 billion richer between 18 March and 31 December 2020. The wealth of Elon Musk, who […]

The January 2021 trade data offer a first glimpse of how the Trade and Cooperation Agreement (TCA) governing economic relations between the UK and the European Union (EU) will affect UK trade. The headline numbers are startling. Compared with the previous January, UK goods exports to the EU in January 2021 fell by 38% from […]

Within the past year, most children in England missed up to 13 weeks of school in the first lockdown and another eight weeks in the most recent one. As the UK emerges from the latest mass school closure, evidence on the negative impact of the pandemic on the mental health of children and young people […]

Newsletter from 12 March 2021 This week started with International Women’s Day, an opportunity to think about how we can forge a gender equal world. The Economics Observatory contributed to this conversation with a week of reflections on the damaging effect of the pandemic on gender equality in the UK – the impact on women […]

Since the start of the pandemic, almost one year ago, many people’s jobs have been affected, either through redundancy, furlough or reduced hours. The sectors in which men or women are more likely to work have affected how hard individuals have been hit. For example, the service sector, in which women are more likely to […]

The start of January 2021 saw the abolition of the 5% ‘tampon tax’ in the UK – that is, the reduced rate of value-added tax (VAT) on many period products. Tampons, pads and alternatives, including the mooncup, are now tax-free, although other reusable products such as period pants remain taxed at 17.5%. The move was […]

'Period poverty' not only means that people who menstruate can’t afford products like pads and tampons. It also means that there is a poverty of menstrual education and support for girls, women and those who menstruate. Covid-19 has further highlighted the different ways that period poverty can be experienced – and how it is not […]

International Women’s Day comes a year after the pandemic hit the UK – 12 months in which underlying gender inequalities have got worse. Covid-19 – and the lockdown measures put in place to contain its spread – have hit women harder than men, and, as Figure 1 shows, women of all ages (left) have experienced […]

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 […]