Category Archives: Blog

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World of Debt, 2014 edition

The IMF's Global Financial Stability Report is out today. These days it makes for slightly less exciting reading than in previous years, which is hardly a surprise given how much financial markets have calmed down since then. However, it nonetheless contains some pretty disturbing evidence of how investors are becoming dangerously dependent on low interest rate - and how their appetite for risky high-debt instruments has risen back to … Continue Reading ››
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The IMF’s subtle warning for Alex Salmond

Buried away in today's IMF World Economic Outlook is an intriguing section about what different kinds of currency arrangements have done for a country's economic growth and stability in the past. Admittedly, it's specifically focused on emerging economies, but it nonetheless provides some interesting food for thought for those prospective independent countries considering a currency union. Though the Fund studiously avoids referring to Scotland, its message is that currency unions … Continue Reading ››
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Coming soon: The Summit

This summer the world will pause for a moment and reflect on two famous anniversaries - the centenary of the outbreak of the First world War and the 70th anniversary of D-Day, Operation Overlord. While the histories of these events are well-told, what is less well-appreciated is that this year also marks two equally important anniversaries. For at the very same time the Great War was beginning, the first cracks began … Continue Reading ››
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How a German bomb thrust Keynes into the international economic history books

Were it not for a German bomb, there's a very real chance John Maynard Keynes would never have become involved in one of the biggest economic achievements of his life - Bretton Woods. In the early 1940s, by far and away the most likely person to have led the negotiations with the Americans over the future of the world economy was not Keynes but Josiah Stamp, an economist and policymaker who … Continue Reading ››
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Five signs the London property bubble is reaching unsustainable proportions

One of the biggest misconceptions in economics is that it’s difficult to spot a bubble. On the contrary: spotting a bubble is actually pretty easy. The difficult thing is predicting when it’ll go pop. So let’s not beat around the bush. London is facing a house price bubble. House prices in the capital are rising at unsustainable rates. On almost every reasonable measure of affordability (we’ll get to them in a … Continue Reading ››
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Full employment: George Osborne’s audacious bid to steal Labour’s biggest economic buzzphrase of the 20th Century

George Osborne has today committed to “fight for Full Employment in Britain”. But what does “full employment” actually mean? The answer, as with so much else in the world of politics and economics, depends on who you ask. According to those who drafted post-war jobs legislation in the 1940s, it meant “the maintenance of a high and stable level of employment”. To economists these days it means the lowest level unemployment … Continue Reading ››
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Britain’s eye-wateringly bad current account deficit – and why it matters

The current account balance is one of those economic numbers that tends to linger in the backdrop these days. In the era of the Gold Standard and Bretton Woods system, when a country’s economic policy was largely determined by its balance with the rest of the world, this measure of one’s international ledger was all-important. These days, other numbers - GDP, inflation, unemployment – tend to hog the headlines. However, the … Continue Reading ››
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Why the Bank of England cannot ignore Britain’s gaping regional divide

There’s a standard line the Bank of England trots out every time someone asks whether they’re happy about the near-unprecedented regional economic disparities around the UK: they "decide monetary policy for the country as a whole" – not a specific region. You can trace this regional agnosticism back to a rather unpleasant episode a decade and a half ago when the then Governor, Eddie George, was reported as saying high unemployment … Continue Reading ››