John Driffill's picture
Affiliation: 
Birkbeck College, University of London
Credentials: 
Professor of economics

Voting history

Greece’s elections and the future of the Eurozone

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
It could happen, of course. But it might not. What is meant by a Syriza victory? They seem likely to do well in the polls, but will probably have to form a coalition with other parties, which will limit their freedom of action. Even if they win an outright majority and can form a government alone, they might decide to honour existing commitments in the short run and negotiate with the Troika over a longer period. Even if they decide to press for debt forgiveness or restructuring very quickly, and Greece leaves the Euro, the effect on other countries may be small. Particularly if the ECB can use its OMT programme to stabilise the market for debt of other member states, and use QE to greatly increase liquidity in the Euro zone. The only Euro zone member which is likely to suffer a contagious reaction is Cyprus

2014 Autumn Statement

 

Question 2: Do you agree that the underperformance of tax receipts in recent years, provides a strong case for higher taxes?

Answer:
Disagree
Confidence level:
Confident
Comment:
No! The unexpectedly low tax revenues have resulted from lower than expected growth of wage rates. This may well be a temporary phenomenon. As slack in the labour market disappears in the coming years, wages are likely to start increasing modestly and tax revenue to rise. There is good reason to keep tax rates as they are at present and allow for higher than expected public borrowing. The automatic stabilisers should be allowed to work. There seems little danger of the UK's public debt getting out of control. At some future date, when the economy is booming and tax revenues are buoyant, tax rates should not be cut; rather borrowing should be lower than planned and the public debt reduced.

Question 1: Do you agree that the scale of this planned reduction in total managed expenditure is credible?

Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
This is not likely to happen, in my view. To achieve it there will have to be a conservative governent in power throughout the period and it will have to stick to a probably unpopular and difficult policy in the face of widespread opposition. It will be less difficult to achieve if there is strong economic growth in the coming years. To achieve it may also require cutting spending in the so far protected areas of health, education and overseas aid. It may also require devising some highly innovative ways of providing public services more cheaply.

Devolving Income Tax Powers within the UK

Question 2: Do you agree that that there is a clear economic case for establishing "English votes for English laws" with the same tax and spending powers as the Scottish Parliament?

Answer:
Agree
Confidence level:
Confident
Comment:
There is a sound case for a move to a federal structure, where the UK legislature deals with matters affecting the UK as a whole, and regional bodies deal with matters that affect the relevant region separately. The role of the UK legislature in Westminster would be reduced.

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Disagree
Confidence level:
Not confident
Comment:
The principle of not raising taxes and spending public money at a more centralised level than necessary -- subsidiarity, in the EU's language -- is sound. Local government in Britain has been persistently undermined by the Westminster government over the years, by reducing its ability to raise taxes and spend them. Britain badly needs better regional and local government with stable powers and responsibilities. It is important that they should be stable and not repeatedly fiddled about with by central government. But I am not convinced that the present proposals pass this test.

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