Michael Wickens's picture
Affiliation: 
Cardiff Business School & University of York
Credentials: 
Professor of economics

Voting history

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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Question 1: The Chancellor forecasts a cyclically adjusted fiscal surplus by 2017-18 and in cash terms by 2019-20. Do you agree that this planned path of fiscal consolidation is appropriate?

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Answer:
Agree
Confidence level:
Very confident
Comment:
It is desirable. Given the openness of the UK economy, whether it is attainable depends on what happens in the rest of the world which is out of the government's control. In particular, it depends on the speed of the eurozone's recovery, on the consequences of China's policy switch to a more consumer-oriented economy and on world commodity prices. Provided UK governments run the economy sensibly, much of the UK's economic cycle is due to these external factors. This is not, of course, what government's admit to when the economy is doing well.

China’s growth slowdown: likely persistence and effects

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Question 2:

Do you agree that if the Chinese slowdown turns out to be persistent, it will have a significant impact on UK growth (say, in the order of a few tenths of a percentage point) and/or it will justify a material change in monetary policy (for example, in terms of the timing and speed of a return to ‘normal’ interest rates) and fiscal policy (for example, in terms of the timing and speed of fiscal contraction).

Answer:
Disagree
Confidence level:
Very confident
Comment:
Slower Chinese growth would - and should - have a marginal effect on UK monetary and fiscal policy. Slower growth would reduce the world demand for raw materials, especially the price oil and thereby UK inflation, and may slow world trade and hence UK exports and tax revenues. But neither is likely to have much affect on UK monetary and fiscal policy.

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Question 1:

Do you agree that the Chinese economy is likely (say more than 50% probability) to maintain in the medium term (say, for at least ten years) a rate of annual growth exceeding 6%.

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Answer:
Disagree
Confidence level:
Not confident
Comment:
China is in the process of switching to a more consumer-oriented economy. This would imply lower levels of investment than in the past and hence a lower growth rate and an economy more like that of a more mature economy with less growth.

ECB's quantitative easing

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Question 2:

Do you agree that the structure of the ECB's QE programme makes the Eurozone more fragile and increases the risk of one country leaving the euro?

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Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
It is being in the eurozone that is the problem . Nations are then unable to bail out their own banks. Given its inflation remit and the ineffectiveness of QE, there is little that the ECB can do to help.

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