Michael Wickens's picture
Affiliation: 
Cardiff Business School & University of York
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:
Disagree
Confidence level:
Confident
Comment:
Although there may be some contagion in the short term, it is very unlikely to be sustained in the longer term. Logically an increase in spreads in other countries would only occur if the market expected these countries to default or leave the eurozone. But even the hardest hit of these countries would be unlikely to do so having already weathered the worst of the storm.

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:
Agree
Confidence level:
Very confident
Comment:
Prior to 2010 expenditures on the NHS, welfare and education doubled while taxes increased by just over half this. This is how public finances got into its present state. Not much seems to have changed in this respect. Sound long-term economic management requires that current expenditures like these should be paid for out of current taxation. The government (and opposition) plan future increases in NHS expenditures. The recession has kept tax receipts from wages from increasing and the pick-up in growth is yet to feed through to higher wages and tax revenues. As this is likely to persist for a few years, in order to reduce debt, it is necessary to raise tax rates in the interim. Only if the government could achieve its spending targets could this be avoided - which takes us back to the politics.

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

Answer:
Disagree
Confidence level:
Very confident
Comment:
The Chancellor aims to achieve the further reduction is mainly through more cuts to welfare benefits. There is no economic reason why it can't be achieved but the politics of doing so strongly reduce its likelihood.

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:
Disagree
Confidence level:
Very confident
Comment:
Whatever the economic case this would be unworkable politically. Neither devolution to Scotland and Wales nor to English regions makes practical sense.

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:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
Income tax in the UK pays for more than just the expenditures on the items under consideration such as welfare, health and education. There are also pure public goods to fund for the whole UK. As noted in the brief, in any devolution there is a real danger of expenditures exceeding revenues and hence a build up of debt in Scotland and Wales that they might well be forced either to default on seek bailout from the rest of the UK. This danger is real because it seems that the main reason why Scotland wants such devolution is in order to spend much more than at present.

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