Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.
Answer:
Strongly disagree
Confidence level:
Confident
Comment:
There is only so much that macroprudential tools can do and it is important to keep the door open to the "sledgehammer" of interest rate policy that might be needed to rein in financial excesses.
Proposition 1: The Bank of England’s mandate should be officially modified to take housing or other asset prices into account in its monetary policy decisions.
Answer:
Disagree
Confidence level:
Confident
Comment:
I don't think there is sufficient consensus on this topic to formalize this policy as a rule.
Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?
Answer:
Just right
Confidence level:
Confident
Comment:
I am not concerned about the levels of public debt, but certainly, the UK cannot borrow at the current rate forever and the OBR predicts some permanent damage to public finances. It was correct not to increase taxes in the upcoming two years and it is sensible to provide some clarity on the way the budgetary gap will be closed in the medium term. I put a high probability on further adjustments down the road as uncertainty abounds. But I do find it useful that the government has provided clarity on the types of measures it might take should deficit reduction prove desirable or necessary. On the measures themselves, I would have preferred to see more progressive tax measures on the personal income tax side.
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
Answer:
Moderately
Confidence level:
Not confident
Comment:
The super deduction will largely remove the cliff-edge created by the increase in corporate tax rates and may further accelerate investment in the short run. However, the corporate sector will exit the pandemic with substantial debt overhang and the question is whether more generous tax deductions for investment will be able to avert this drag on investment.
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 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).
Asset Prices and Monetary Policy
Proposition 2: Asset prices and financial imbalances are best addressed using macroprudential tools and left out of the monetary policy decision making process.
Proposition 1: The Bank of England’s mandate should be officially modified to take housing or other asset prices into account in its monetary policy decisions.
The “Spend Now, Tax Later” Budget
Question 3: Which of the following best characterizes the pace at which the budget addresses UK’s medium term fiscal challenges (deficit and debt)?
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
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?
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