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:
Reduces deficits too rapidly
Confidence level:
Extremely confident
Comment:
Sunak has failed to learn from the US example. What should have been a budget for enhancing the recovery, greening the economy and helping those most badly hit by the pandemic. Instead it was a budget largely about reducing deficits. A clear indicator of Sunak's failure is that the OBR expect Bank interest rates to be 0.5% or less when fiscal consolidation starts. Osborne's failure is being repeated, with the only difference being a focus on tax rises rather than spending cuts.
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, but that means less investment from year 3 of the recovery (see OBR analysis). So a large transfer of funds from the public sector to companies that mostly did well out of the pandemic, with marginal benefits.
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:
Not confident
Comment:
But marginal compared to the damage caused by Brexit
Question 2: Which of the following will be the greatest inflationary (or deflationary) force facing the UK economy?
Answer:
Public debt
Confidence level:
Not confident
Comment:
See previous answer. This is not because public debt somehow causes inflation, but because attempts to reduce debt cause deflation.
Question 1: Which of the following scenarios is most likely to hold on average for most of the upcoming decade?
Answer:
The BoE will be unable to avoid inflation falling below its current target
Confidence level:
Not confident
Comment:
Apart from possible short term blips caused by first Brexit and then the end of the pandemic, a Conservative government may return to fiscal contraction involving spending cuts, leading to an economy with subdued inflation and requiring the Bank of England to keep rates low.
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).
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?
Should We Worry About Post-Covid Inflation?
Question 2: Which of the following will be the greatest inflationary (or deflationary) force facing the UK economy?
Question 1: Which of the following scenarios is most likely to hold on average for most of the upcoming decade?
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