Costas Milas's picture
Affiliation: 
University of Liverpool
Credentials: 
Professor of Economics

Voting history

Brexit and financial market volatility

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Question 2: Do you agree that the possibility of Brexit significantly increases uncertainty and volatility in financial markets and the economy in general?

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Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
Brexit worries feed back into higher financial and economic uncertainty. This is because BREXIT supporters have not explained to the rest of us what is going to happen after a possible BREXIT. We currently have in place trade agreements with the whole of the EU. How feasible/fast will it be to put in place individual agreements with the remaining 27 countries? In other words, we currently have a season ticket in Europe. Why, on earth, would we want to switch to individual (and much more expensive) tickets?

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Question 1: The value of the pound fell sharply this week. Do you agree that the public debate on Brexit can be expected to (continue to) lead to a substantially higher level of exchange rate volatility in the upcoming months?

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Answer:
Agree
Confidence level:
Confident
Comment:
The exchange rate volatility we are currently experiencing is due to a "systematic component" and an "idiosyncratic component". Systematic component: It makes sense to expect a turbulent period for the exchange rate because not even BREXIT supporters are able to explain to the rest of us what the new "status quo" is going to be. This source of exchange rate volatility will persist in the coming months and is "non-diversifiable". Idiosyncratic component: This has to do with how our government is handling (so far) the referendum issue. Mr Cameron, and rightly so, is putting "heart and soul" into staying in the EU. Fair enough. At the same time, however, senior cabinet members (and prominent members of the Conservative party) are also putting "heart and soul" into exiting the EU. Basically, BREXIT supporters within the conservative party are challenging all arguments made by Mr Cameron and, at the end of the day, his very authority as prime minister. This "pluralistic cacophony" makes the rest of us wonder the obvious: How long will it take before ministers realise that they have to put aside their ideological differences on Europe and get back into dealing with the country's problems? If this does not happen any time soon, exchange rate volatility, driven by this very idiosyncratic component, will turn even nastier.

Market Turbulence and Growth Prospects

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Question 2: Do you agree that the falls in share prices, low oil prices and the slowdown in some emerging market economies will have a significant negative impact on the UK’s economic recovery?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Ir is more likely than not that we will see an annual GDP growth rate of less than 2.4% (which is what the OBR currently predicts) but still above 2%.

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Question 1: Do you agree that economic growth prospects for the global economy have seriously deteriorated?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Disagree in the sense that prospects might have deteriorated but not "seriously"

Autumn Statement & Charter for Budgetary Responsibility

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Question 2: Do you agree that the Charter for Budgetary Responsibility is helpful in underpinning the credibility of fiscal policy?

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
I am sceptical about how useful a "rule" in terms of "unrevised" data will be. Indeed, at the height of the crisis, we were talking about a double-dip and even a triple-dip recession. A triple-dip never occurred whereas a double-dip one was revised away.

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