David Cobham's picture
Affiliation: 
Heriot Watt University
Credentials: 
Professor of economics

Voting history

National Living Wage and the UK economy

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Question 2: Do you agree that the new NLW will have a muted effect on wages and prices?

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Answer:
Strongly agree
Confidence level:
Confident
Comment:
For reasons outlined in answer to previous question, the rise is unlikely to have a large effect, but insofar as it does this is a good thing - reversing a trend towards inequality which has prevailed over several decades - rather than a bad thing, and economists should say that in public.

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Question 1: Do you agree that the new National Living Wage is likely to lead to significantly lower employment?

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Answer:
Strongly disagree
Confidence level:
Confident
Comment:
The rate of increase is really not that high; there are monopsony-type reasons for thinking that employment will not fall; it concerns only a small proportion of most firms' labour-forces; and because most workers likely to receive the increase are in the non-traded goods and services sector we should expect a change in relative prices (think of it as a kind of Balassa-Samuelson effect) rather than a large change in employment (we all get to pay more for our lattes, and this is a small price for living in a decent less unequal society).

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:
Agree
Confidence level:
Very confident

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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:
Very confident

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:
Agree
Confidence level:
Very confident
Comment:
It's clear that there will be a 'significant negative impact', but the nature of the risk to the UK's recovery is less clear, because that depends on how strong it is assumed that that recovery would have been otherwise. If the recovery is thought of as weak and anaemic (see wage levels and growth, GDP per capita, investment, exports, household debt, etc), then these factors may be responsible only for a limited further weakening.

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