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

Voting history

Economic Consequences of an Independent Scotland June 2014

Question 2

Assuming that Scotland becomes an independent country, do you agree that the UK government's position of ruling out a monetary union is in the economic interests of the continuing UK? 

Answer:
Disagree
Confidence level:
Confident
Comment:
It seems inevitable that the rest of the UK will agree to Scotland's joining the sterling union. This will be under tight fiscal restrictions. This will be in the interest of the rest of the UK because it will limit the potential fiscal turbulence coming from across the border.

Question 1

Do you agree that that Scotland would better off in economic terms as an independent country?

Answer:
Disagree
Confidence level:
Confident
Comment:
Scotland would only be better off independently if it was imbued with a strongly free market approach to its problems, so that it became another 'Celtic Tiger'. However as its approach is essentially socialist, it would face a vey bad outlook until this changed from poor experience (much as occurred with Ireland).

Euro Area Deflation and Risk for UK Economy May 2014

Question 2

Do you agree that a deflation in the Euro area (as defined in Question 1) would pose a considerable risk to the UK recovery?

Answer:
Disagree
Confidence level:
Confident
Comment:
If the euro-zone were to experience deflation the Japanese experience suggests that this becomes embedded in the economy in the form of very low long term interest rates and a high demand for money, together with an appreciating exchange rate. Low growth in Japan has its origin in a weak 'supply side'. Having exited from a long period of fast growth in manufacturing, Japan has found it difficult to liberalise its service and agricultural sectors. 'Deflation' has been blamed for Japan's low growth but the evidence for this is hard to find; the evidence of low productivity growth is plain however. If the euro-zone entered deflation I would expect similar behaviour to Japan (interest rates would be low, the exchange rate strong); but low growth in the zone would only occur if systematically low productivity growth policies were adopted. This would be a worrying prospect; but it is a separate issue from deflation. It is often forgotten that under long periods during the gold standard growth was robust.

Question 1

Do you agree that there is a significant risk of a sustained deflation across the Euro Area in the coming two years?

Answer:
Disagree
Confidence level:
Confident
Comment:
Sustained deflation is highly unlikely because of the robustness of inflation expectations. We have learnt from wide experience of western countries with accepted inflation targets that these have enormous credibility and lead to a considerable stabilising of actual inflation around these targets. This was tested recently by the Bank of England's decision to let inflation in the UK diverge for a few years markedly upwards from the target. In the euro-zone the ECB has a widely understood and accepted target and has suggested that it would take unspecified measures to ensure that the target is hit in the medium term. These measures could include Quantitative Easing as in the US and UK; but other easing measures are available including paying lower or even negative interest on bank balances.

Prospects for Economic Growth in the UK April 2014

Question 2

Do you agree that, in the wake of the financial crisis, any downward adjustment to the expected average annual long-term growth rate of the UK economy is likely to be by less than 0.25 percentage points?

Answer:
Agree
Confidence level:
Confident
Comment:
In line with my previous answer about the output gap, I think the long term growth rate can be maintained at the previous recent (fairly solid) rate provided that policy is altered in a liberal market direction. The reaction to the crisis has been in the form of a 'regulative backlash' which has had highly damaging effects, especially visible in the collapse of lending to the vital SME sector. The reaction has overlapped with a general associated movement to regulation in other areas, especially energy. As usual this is also related to EU initiatives; thus EU policy too needs to move in a liberal reform direction. My assessment is that this is likely.

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