Richard Portes's picture
Affiliation: 
London Business School and CEPR

Voting history

Brexit and financial market volatility

======================================================================

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?

======================================================================

Answer:
Agree
Confidence level:
Confident
Comment:
I agree, but I wouldn't focus on volatility - leave that for the finance people, much overemphasised. But if the perceived likelihood of Brexit rises, the sterling exchange rate is likely to fall further. The evidence that Brexit would be significantly negative for the British economy is clear, and those in the financial sector will be particularly sensitive to this. Perhaps most important for the exchange rate, however, would be capital outflow and expectations of a fall in FDI, as well as expectations of a deterioration of the current account.

China’s growth slowdown: likely persistence and effects

======================================================================

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:
Strongly Disagree
Confidence level:
Very confident
Comment:
The main impact is on Chinese imports of raw materials and semifinished goods. That can't be a significant proportion of our exports to China. The effects on us of the negative impact on emerging market exporters to China must also be second-order. And our exports will benefit from the Chinese switch towards consumption - in particular, foreign travel and educating Chinese students abroad, provided we have a more sensible visa policy. That may require a change of Home Secretary. Chinese financial liberalisation and the development of their financial sector (part of the structural switch) will also probably be positive for the UK.

======================================================================

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%.

======================================================================

 

Answer:
Disagree
Confidence level:
Confident
Comment:
The deceleration is mainly the consequence of the intentional switch from industry to services and from investment to consumption. It will not be dramatic - no 'crash', just a normal reversion to rapid but not extraordinary growth rates, say 5%. And since we don't measure services output as reliably as we do industrial production, one can't be terribly confident of what the reported slowdown will mean.

ECB's quantitative easing

======================================================================

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?

======================================================================

Answer:
Agree
Confidence level:
Confident

======================================================================

Question 1:

Do you agree that the design of the ECB's QE programme reduces its effectiveness? 

======================================================================

Answer:
Strongly Agree
Confidence level:
Very confident

Pages