Nicholas Oulton's picture
Affiliation: 
London School of Economics
Credentials: 
Senior Visiting Research Fellow

Voting history

Migration and the UK economy August 2014

Question 1: Do you agree that migration to the UK can be expected to be beneficial for the average income of current UK inhabitants in the upcoming decade?

Answer:
Disagree
Confidence level:
Not confident
Comment:
My answer, that the average income of current inhabitants of the UK will be lowered by further migration over the next decade, is based on my judgement that the bulk of the migrants will be relatively unskilled. They will come predominantly either from Commonwealth countries or from the poorer parts of the EU. So the average level of human capital per capita in the UK economy will fall. Of course this does not mean that everyone's income will fall (relative to a low migration world) since the highly skilled and those who purchase the services of unskilled labour will benefit. I am aware that a number of studies have found that the impact of migration on wages and employment of the native British is small. However, there does not seem to be much doubt about the sign of the effect. In addition the studies do not consider all the costs associated with migration, what one might call the costs of integration. The latter does not just mean additional schools and housing but also the policing and security costs of dealing with ideologies which are fundamentally at variance with traditional British values (not to mention the EU's Copenhagen principles).

Economic Consequences of an Independent Scotland June 2014

Question 2

Assuming that Scotland becomes an independent country, do you agree that the UK government's position of ruling out a monetary union is in the economic interests of the continuing UK? 

Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
As has been argued by many others, a currency union would require a fiscal and banking union as well to make it work. Otherwise the UK government would be on the hook for unquantified liabilities generated by the Scottish finance industry. I can't see an independ Scottish govenrment agreeing to make the necessary concessions to make this possible. .

Question 1

Do you agree that that Scotland would better off in economic terms as an independent country?

Answer:
Disagree
Confidence level:
Confident
Comment:
I think that an independent Scotland would suffer a one-off negative shock due to uncertainty about its currency and EU membership. I do not think it likely that an independent Scottish government would be able to follow policies which would raise the Scottish growth rate. The best bet for Scotland would be to follow Ireland's earlier strategy. But it is very unlikely that the EU would permit Scotland to cut corporation tax to Irish levels, assuming that Scotland was able to join. Salmond's record of promising everything to everybody does not inspire confidence that policy will be growth-promoting in practice.

Euro Area Deflation and Risk for UK Economy May 2014

Question 2

Do you agree that a deflation in the Euro area (as defined in Question 1) would pose a considerable risk to the UK recovery?

Answer:
Disagree
Confidence level:
Confident
Comment:
Given my answer to the first question, there must be some risk to the UK recovery. But the other indications for the UK are currently so strong that I would not expect low inflation in the eurozone to derail the UK recovery. If actual deflation occurred in the eurozone then this would present more of a risk. In my view, a bigger risk at the moment is of a EU-wide recession induced by a sanctions war with Russia over Ukraine. Serious disruption of gas supplies to Europe would have big knock-on effects in the UK.

Question 1

Do you agree that there is a significant risk of a sustained deflation across the Euro Area in the coming two years?

Answer:
Disagree
Confidence level:
Not confident
Comment:
There may be a significant risk of inflation at a bit below 1% in the euro area for the next year. This would make the real rate of interest actually paid by firms higher than desirable and so impede the euro area recovery. The inflation/deflation dichotomy is not the real issue though obviously if deflation were to occur this would make real interest rates even higher.

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