Michael Wickens's picture
Affiliation: 
Cardiff Business School & University of York
Credentials: 
Professor of economics

Voting history

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)?

Answer:
Just right
Confidence level:
Confident
Comment:
The main issue is the extent to which removal of lockdown will generate a large increase in activity. It is too soon to know. Therefore a later budget would have been better. In the meantime doing little is probably the safest course. In the longer term it will be necessary return to something like fiscal balance. With a strong bounce-back after lockdown and a longer-term framework, this could remove any need for tighter budgets. If the government had issued perpetuities then no tightening would have been required. Are the government missing the boat? As, soon, interest rates will rise making this strategy too expensive. Why hasn't the Chancellor ever discussed this option?

Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?

Answer:
Moderately
Confidence level:
Confident
Comment:
It will bring investment forward and so quicken the recovery from Covid. This is however at the expense of longer term investment when the super-deduction ends. I would prefer keeping the super-deduction and leaving open its end date with the possibility of not ending it or tapering it depending on the state of future aggregate demand.

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:
If by international competitiveness is meant attractiveness to foreign investment in the UK then it is mildly discouraging but does not make the UK too different from other competitor countries. If is meant the price competitiveness of UK goods and services then it could be more damaging as it discourages investment in the UK in the longer 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?

Answer:
No
Confidence level:
Confident
Comment:
Previous comment explains why

 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:
No change in policy
Confidence level:
Confident
Comment:
Biasing the ECB's portfolio is fiscal policy and not monetary policy. The ECB would be behaving politically if it biased its portfolio. Other ways should be found to encourage a green environment such as through corporation tax and allowances. The ECB should not be encouraged to purchase corporate bonds unless deemed necessary to fulfil its existing mandate.

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