Michael Wickens's picture
Affiliation: 
Cardiff Business School & University of York
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:
Agree
Confidence level:
Very confident
Comment:
But only in the short to medium term until the uncertainty is resolved

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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:
Extremely 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:
Disagree
Confidence level:
Not confident
Comment:
Being a net oil importer and not being greatly dependent on exports to emerging markets, the UK is in a relatively favourable position. The main downside has been the effect of China's slowdown on iron and steeel prices which have made UK production less competitive. Though even this will benefit the UK consumer in the longer term. The fall in stockmarkets reflects a composition effect arising from the contributions to the index of oil and steel stocks, together with the effects of greater uncertainty. The latter will pass soon.

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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:
Strongly Agree
Confidence level:
Extremely confident
Comment:
This much is obvious. The next issue is how these developments will affect individual economies. The more dependent an economy is on exporting to China - such as Germany - and the more an economy depends on primary product exports - such oil or ores - the greater the impact.

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:
Agree
Confidence level:
Extremely confident
Comment:
It is helpful, but it is not the best fiscal stance. Nor can it pre-commit subsequent governments to follow it. The correct policy is to tax finance permanent expenditures and to debt finance government capital expenditures and, in recession, the automatic stabilisers. This will entail running surpluses in good times in order prevent debt from increasing over time. The Charter seeks surpluses in normal times but this is not strictly necessary. In bad times - which could be frequent - surpluses are not appropriate. Like the Treasury under Gordon Brown, it still doesn't seem to understand what best fiscal practice is.

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