Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?
Answer:
Moderate damage
Confidence level:
Confident
Comment:
Corporate taxation affects business investments and, consequently, both UK’s productivity and international competitiveness. UK business investments depend on the spread between the UK corporate tax rate and the corporate tax rate in the rest of the world. At 19%, currently, the UK corporation tax is well below the OECD average of 23.39% (https://stats.oecd.org/index.aspx?DataSetCode=Table_II1). From my econometric calculations, an increase in the UK corporate tax rate by six percentage points (assuming no change in the corporation tax for the rest of the world) will reduce UK business investments by a massive 16.8% in the (medium to) long run. This will apply to the larger 10% firms in the UK so the long-run negative impact of business investments will not be as bad as initially feared. That said, the problem is here is that the larger firms are, in fact, the ones most likely to invest. On the other hand, the rest of the world will also have to raise its corporation tax to tackle the rising COVID-19 debt. Put everything together to conclude that international competitiveness will face (through the hit in business investments) a moderate damage in the medium run.
Question 2: Would you support changing the ECB’s mandate to incorporate the EU’s target of carbon neutrality by 2050, if such a change is deemed legally necessary to adopt your preferred approach?
Answer:
Yes
Confidence level:
Confident
Question 1: Which of the following actions is the most advisable approach for European Central Bank to address the environmental impact of its bond-purchasing policies?
Answer:
Actively biasing its portfolio towards green investments
Confidence level:
Confident
Comment:
Although I am keen to see a bias towards green investments, there appears to be some inherent contradiction in the whole debate. Indeed, the ECB’s QE programme by definition will be short lived. So it appears rather futile for the ECB to support green technology now (or at least in the short run) only to ‘pull the green plug’ later on when QE is abandoned. Which brings into the picture the importance of a change in the ECB's mandate.
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
The “Spend Now, Tax Later” Budget
Question 1: How will the increase in the corporate tax rate from 19% to 25% affect the UK’s international competitiveness in the medium term?
The ECB’s Green Agenda
Question 2: Would you support changing the ECB’s mandate to incorporate the EU’s target of carbon neutrality by 2050, if such a change is deemed legally necessary to adopt your preferred approach?
Question 1: Which of the following actions is the most advisable approach for European Central Bank to address the environmental impact of its bond-purchasing policies?
Should We Worry About Post-Covid Inflation?
Question 2: Which of the following will be the greatest inflationary (or deflationary) force facing the UK economy?
Question 1: Which of the following scenarios is most likely to hold on average for most of the upcoming decade?
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