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

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Banks & financial markets

What can happen when economic policy-makers lose credibility?

Fears that central banks’ commitment to low inflation is weakening or that a government’s fiscal plans are uncosted, unchecked and unfunded can be highly damaging for households, businesses and the public authorities themselves. A lack of credibility is a disaster for policy-makers.

DATA HUB

Long work hours in the UK

Prices & interest rates

What is supply chain inflation and why is it driving up consumer prices now?

The interconnectedness of global supply chains means that when one price goes up, others tend to follow. Increases in labour, energy and transport costs are contributing to inflation around the world, posing difficult policy challenges.

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The prices of shares in US technology companies have skyrocketed in recent months. A number of indicators suggest that these firms are overvalued, perhaps the strongest sign of a ‘tech bubble’ being the extent to which insiders are selling their shares.

Banks & financial markets

The Bank of England’s Monetary Policy Committee at 25: where next?

Twenty-five years since being granted operational independence, the Bank of England can look back at a successful track record. But with inflation once more resurgent, the Monetary Policy Committee faces the challenge of engineering a return to price stability without prompting a recession.

Energy & climate change

How have economists thought about climate change?

Some economists have been at the forefront of debates about policies to combat global warming. Research over the past three decades has explored issues around the likely effects of climate change; when to take action; and how to achieve efficient reductions in greenhouse gas emissions.

Science, technology & innovation

Big Tech: how can we promote competition in digital platform markets?

With the growing market dominance of digital platforms like Amazon, Apple, Facebook and Google, calls for an effective policy response have become louder. New competition regulations are on the horizon, but international cooperation is needed for them to succeed.

Jobs, work, pay & benefits

Minimum wages and living wages: what happens in times of inflation?

It is widely accepted that minimum wages are an effective way to help workers at the lower end of the income distribution without damaging their job opportunities. But while the UK’s minimum wage has risen faster than the rate of inflation over the past two decades, it is now falling behind.

Banks & financial markets

What would the currency options be for an independent Scotland?

If Scotland were to become independent from the rest of the UK, it would need to decide what currency to use. Options include sticking with sterling, creating a new national currency or joining a monetary union, such as the eurozone.

Science, technology & innovation

What is web3 and what might it mean for the UK economy?

Many are claiming that the new era of the internet – web3 – will be the end of dominant Big Tech platforms like Google, Facebook and Apple. But this murky world of cryptocurrencies, blockchain technology and non-fungible tokens brings new risks – and policy-makers are right to be wary.

Data stories

Is inflation avoidable?

Inflation in the UK is at a 40 year high, with prices rising across the economy. Shoppers can look for cheaper products, but many are already buying the lowest-cost options and the prices of those bargains are going up faster than those of higher-priced goods.

Science, technology & innovation

What are the social responsibilities of the dominant digital platforms?

Most digital platforms have emerged as big winners from the pandemic. Yet they are under regulatory pressure on both sides of the Atlantic. A fundamental question is whether and how these businesses should be held accountable for what happens on their websites.

Lessons from history

Sterling crisis: what are the historical precedents?

The pound is currently weak against the dollar and, to some extent, the euro. Past currency crises show that the sterling exchange rate can be vulnerable to expectations about the economy, which today may be influenced by the cost of living crisis, post-Brexit trade and prospects for growth.

Lessons from history

How has inflation been fought in the past?

Inflation is damaging to the economy. Recent years have given the impression that public authorities knew how to keep it under control, but the current resurgence has revived old fears. The policy response will benefit from a look at how previous inflations have been tackled.

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