Jonathan Portes's picture
Affiliation: 
KIng's College, London
Credentials: 
Professor of Econoics and Public Policy

Voting history

House Prices and the UK economy

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Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

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Answer:
Agree
Confidence level:
Confident
Comment:
In the short term, yes, although the direction of causality is primarily the other way - slowing GDP growth leading to lower house prices. In the longer term, lhowever, lower house prices, especially if driven by increased supply, would be good for labour mobility, wealth inequality and so on, and would hence be positive for productivity and GDP growth.

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Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?

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Answer:
Agree
Confidence level:
Confident
Comment:
Yes; house prices are likely to be subdued nationally. But a lot depends on wider economic developments, which in turn depends on Brexit. The central scenario remains sluggish growth, both in the economy and for house prices. But the prospect of a "chaotic Brexit" could make matters considerably worse.

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Agree
Confidence level:
Not confident
Comment:
It is likely to be a contributing factor but not necessarily main cause. Nor does it follow that tighter policy b- rather than stronger/better targeted regulation, higher capital bequirements etc - should be the policy response

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
It is very difficult to reconcile current levels of equity valuations and very low long term interest rates. Market measures of volatility/risk also seem implausibly low. It is of course almost impossible to call "bubbles" ex ante but some at least of the obvious warning signs are there. And it is even harder to predict precisely how a sharp reversal would manifest itself and how large any negative consequences would be - but again history suggests we should be worried

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Very confident
Comment:
The evidence seems clear that falls in unemployment in the UK have not had the same impact on real wage growth as before the crisis (see work by Machin and Blanchflower). This is true even over the last few years of low inflation (after the 2011 spike). This seems likely to be the result of two factors: first, structural changes in the UK labour market (in particular the growth of forms of insecure and precarious work). Note that this is not really about regulation or law: the UK labour market is somewhat more regulated than in say 2000, but rather changes in technology and work practices. Second, the astonishingly poor productivity performance of the UK since the crisis, which is likely both to reflect demand and supply side issues.

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