Patrick Minford's picture
Affiliation: 
Cardiff Business School
Credentials: 
Professor of economics

Voting history

Prospects for UK Economic Growth

Question 2: What is the most important contribution economic policymakers can make growth in the UK over the next decade? 

Answer:
Other or don't know
Confidence level:
Confident
Comment:
As noted in my first comment, the key elements are a) to open up regulation in the UK's common law tradition based on empirical evaluation of evolving results from trialling new production methods rather than closing down new methods by risk-averse bans b) to open up trade with non-EU countries via free trade agreements. Policymakers must be robust in opposing regulative and protectionist demands from domestic lobbies.

Question 1: How do you see prospects for future (per capita) GDP growth in the UK in the next decade?

Answer:
High growth because of structural factors
Confidence level:
Confident
Comment:
The UK is moving into a new policy environment where it can regulate for innovation rather than for EU-style risk-avoidance. It is also able to open up the economy to world competition via new free trade agreements with the non-EU world. This change is hard to evaluate but should promote higher growth over the long term. Much recent comment has highlighted the disruption due to the end of the close EU relationships. But long term growth will depend on these new developments.

Post-Covid Fiscal Rules for the UK

Question 3: Which of the following variables should fiscal rules target to best improve the performance of the UK macroeconomic policy going forward.

Answer:
No explicit target
Confidence level:
Confident
Comment:
The aim of fiscal policy should be to support growth in the current stagnationary environment, and subject to the long run solvency constraint. The targets sequentially selected have obscured this main role of fiscal policy and led to a contractionary bias in it. This was suspended by the Covid crisis, force majeure. But post-Covid there is a creeping return to a Treasury-pushed agenda of fiscal targets that will inhibit policies to support growth that do not endanger solvency. Instead the Treasury should publish a Solvency monitor, checking that the growth of debt is less than the real interest rate and hence that the present value of debt converges on zero in the long run.

Question 2: What impact has the sequence of fiscal rules adopted in the UK since 1997 had on the conduct of fiscal policy in the UK?

Answer:
Harmed
Confidence level:
Confident
Comment:
As noted in my first answer, growth has been weakened since the financial crisis, and interest rates driven by QE to the zero bound, where monetary policy has little effect and savings get a poor return. The economy's chronic weakness needed to be met by a fiscal/monetary mix with stronger fiscal expansion and less monetary stimulus.

Question 1:  What impact has the sequence of fiscal rules adopted in the UK since 1997 had on the level of UK public debt? 

Answer:
Reduced
Confidence level:
Confident
Comment:
The main episode was the aftermath of the financial crisis of 2008 when the rules led to a programme of 'austerity'. This reduced debt but weakened growth, requiring aggressive monetary stimulus via Quantitative easing. This in turn drove interest rates to the zero bound.

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