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Jeremy Smith



Articles by Jeremy Smith

Changes in the UK labour market from 2019 to 2022 – our new report

August 3, 2022

Our new research report, published today, looks at the state of the UK’s labour market, based on the most recent data from the Office for National Statistics. It compares these recent data with those from 2019, and sometimes with earlier data. You can download the report here.
The report looks at a wide range of issues, including size of the workforce, the economically active and inactive, employees and self-employed, full and part-time workers. It also examines data on developments in nominal and ‘real’ (after allowing for inflation) pay. It shows that over a long period, the sector of the workforce whose pay has increased by far the most is the Finance & Business sector. The sectors that have relatively declined in pay are manufacturing, the public sector, and those in the ‘wholesale /

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The UK’s public spending led recovery – before the cost-of-living deluge strikes

May 18, 2022

In this article I look mainly at the UK’s GDP position. While the ONS first estimate for Q1 2022 shows that it is now 0.6% higher than the pre-pandemic peak in Q3 of 2019, this is entirely down to increased government consumption and investment, mainly health-related. But for this real-terms increase, the economy (measured in GDP) would be some 2% smaller now, even before the cost-of-living crisis hits us fully, and before government and Bank of England tighten fiscal and monetary policy simultaneously.  In a second article, I will seek to analyse this week’s labour market statistics and their significance for policy.
We’ve now had the UK’s GDP and labour market estimates from the Office for National Statistics for the first quarter (Q1) of 2022, plus the April stats for inflation, so we

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Inflation and pay – Doing the wrong Something

February 6, 2022

Many years ago, on family holiday in Wales, a problem arose when my father tried to turn our car and caravan around in an urban street.  A man noted generally for his calmness, Dad had got out and started looking at whatever the problem was.  My brother and I (ages 14 and 12) stayed in the back seat chatting away inconsequentially but, it seems, annoyingly.  
Suddenly, Dad’s patience broke – “GET OUT AND DO SOMETHING!” he boomed.  Unaccustomed to such temper-induced imperatives, we leapt out into the street, examined the situation without having a clue what to do, and tried to look as though we were doing something helpful.  Dad soon calmed down, and somehow the problem was resolved.
Last Wednesday’s Bank of England Monetary Policy report and MP Committee decisions brought this old memory

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(How far) has Brexit affected UK GDP?

January 18, 2022

It looks as if the UK’s GDP will have risen by a little over 7% in 2021, after a fall now estimated at 9.4% in 2020. (We await the Q4 data).  It seems that – despite stronger November data – GDP in 2021 will come in below that of 2019, and maybe a tad less than 2018.  Clearly COVID has played a major part, but is there also evidence of Brexit-induced slowdown in the mix?
The “Conservative Home” website (among so many other right-wing propaganda outlets) tries hard to keep spirits up and the – ever-receding – vision of post-Brexit economic success alive.  Here’s Harry Phibbs (3rd January):
“The UK’s economy continued to grow – by 2.3 per cent in 2016, 2.1 per cent in 2017, 1.7 per cent in 2018, and 1.7 per cent in 2019. True, it fell in 2020, by 9.7 per cent –  but that was due to the

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Spend for recovery & green future, raising corporation tax is ok, & there are no bond vigilantes

March 3, 2021

A couple of weeks ago, my old shower broke down, needing replacement. Chatting to bathroom-kitchen store manager, I learnt that business was brisk for them, especially the demand for new bathrooms.  In fact, very brisk. Lots of people wanting new bathrooms for their holiday to-be-let homes, with higher rents in mind, as well as for actually lived-in homes. His order book is far stronger than in ‘normal’ times.
For those who ‘have’, the times are not – financially speaking – bad at all.
All this is mainly planned substitute spending; instead of overseas holidays, frequent eating out or public entertainment, many are choosing new home improvement projects.
Finding the money is unlikely to be a problem for this segment of the population.  In a recent speech, Bank of England Chief Economist

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Spend for recovery & green future, raising corporation tax is ok, & there are no bond vigilantes

March 3, 2021

A couple of weeks ago, my old shower broke down, needing replacement. Chatting to bathroom-kitchen store manager, I learnt that business was brisk for them, especially the demand for new bathrooms.  In fact, very brisk. Lots of people wanting new bathrooms for their holiday to-be-let homes, with higher rents in mind, as well as for actually lived-in homes. His order book is far stronger than in ‘normal’ times.
For those who ‘have’, the times are not – financially speaking – bad at all.
All this is mainly planned substitute spending; instead of overseas holidays, frequent eating out or public entertainment, many are choosing new home improvement projects.
Finding the money is unlikely to be a problem for this segment of the population.  In a recent speech, Bank of England Chief Economist

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GDP, Brexit & the trade winds of change

February 15, 2021

In 2020, GDP per head of population fell, year on year, by a massive 10.5%. For me, that’s the  take-away statistic from last Friday’s GDP-related ‘data dump’ by ONS.  The level of GCDP per head (in real, inflation-adjusted terms) was £29,124.  This was almost identical to the level in 2009 (£29,098), at the peak of the global financial crisis, and otherwise the lowest on record since 2003. 
Of course, the extent of the decline is heavily down to the government’s  first lockdown restrictions, which fell mainly in Q2.  But even the Q4 estimate of £7,456 per head (8.3% below Q4 2019) is still the lowest for that quarter since 2011 – and indeed lower than the Q4 figures for 2005-2007.
‘Real’ GDP is estimated to have fallen 9.9% for the year 2020, which may have caused relief for government

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Karl Polanyi’s “Present Age of Transformation”: the Bennington Lectures 80 years on

December 29, 2020

As 2020 draws to a close, and with a new US President due to take office in a few weeks, we want to mark – if a little late in the year – the 80th anniversary of Karl Polanyi’s five lecture series at Bennington College, Vermont, which he called “The Present Age of Transformation”.  PRIME is proud to have published these in pdf format back in February 2017, with the much appreciated consent of the college, which ‘houses’ the original lecture manuscripts.  We were particularly delighted that Karl’s daughter, Kari Polanyi-Levitt, a great progressive thinker in her own right, honoured us with an introduction.
The lectures are fascinating in the insight they give into Polanyi’s thinking as he worked on what was to become his masterpiece, “The Great Transformation”, published in 1944.  The

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Karl Polanyi’s “Present Age of Transformation”: the Bennington Lectures 80 years on

December 29, 2020

As 2020 draws to a close, and with a new US President due to take office in a few weeks, we want to mark – if a little late in the year – the 80th anniversary of Karl Polanyi’s five lecture series at Bennington College, Vermont, which he called “The Present Age of Transformation”.  PRIME is proud to have published these in pdf format back in February 2017, with the much appreciated consent of the college, which ‘houses’ the original lecture manuscripts.  We were particularly delighted that Karl’s daughter, Kari Polanyi-Levitt, a great progressive thinker in her own right, honoured us with an introduction.
The lectures are fascinating in the insight they give into Polanyi’s thinking as he worked on what was to become his masterpiece, “The Great Transformation”, published in 1944.  The

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UK GDP – the Q2 close-down, and the distorting effect of ‘imputed rental’

October 2, 2020

On Wednesday (30 September) the Office for National Statistics published its second estimate of GDP for the second quarter of 2020, April to June.  The very marginally positive news is that the fall, between Q1 and Q2, was reduced from 20.4% to 19.8%.  Since this was still the largest recorded quarterly fall since records commence in 1955, this is hardly a cause for jubilation – and even less so since the Q1 drop was raised from -2.2% to -2.5%.
As we discuss below, the position would arguably be still worse, save for the curious treatment of ‘imputed rent’ for houseowners, which – as a purely fictional or metaphysical element – nonetheless forms an inordinately large chunk of GDP.
Looking at the path of the UK’s economic progress in recent years, we may note that the percentage rate of

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UK GDP – the Q2 close-down, and the distorting effect of ‘imputed rental’

October 1, 2020

On Wednesday (30 September) the Office for National Statistics published its second estimate of GDP for the second quarter of 2020, April to June.  The very marginally positive news is that the fall, between Q1 and Q2, was reduced from 20.4% to 19.8%.  Since this was still the largest recorded quarterly fall since records commence in 1955, this is hardly a cause for jubilation – and even less so since the Q1 drop was raised from -2.2% to -2.5%.As we discuss below, the position would arguably be still worse, save for the curious treatment of ‘imputed rent’ for houseowners, which – as a purely fictional or metaphysical element – nonetheless forms an

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This time, Mr Sunak has got it wrong

September 24, 2020

Till now, I have supported much of what Chancellor Rishi Sunak has put in place, as measures to help the economy through the pandemic.  The furlough scheme has proved its worth.
But today’s measures are inadequate and disappointing.  The new Job Support Scheme, under which the government will pay some 22% of the wages of employees who work at least one third of their usual hours.  This compares with the 60% of wages to be paid by the government in October, the last month of the furlough scheme.
According to the Financial Times, the monthly cost of the new scheme might by around £1 billion, compared to £4 billion per month for the furlough scheme (at October levels).  For the remaining 5 months of the year, that makes less than £5 billion, compared to the £20 billion likely cost if the

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This time, Mr Sunak has got it wrong

September 24, 2020

Till now, I have supported much of what Chancellor Rishi Sunak has put in place, as measures to help the economy through the pandemic.  The furlough scheme has proved its worth. But today’s measures are inadequate and disappointing.  The new Job Support Scheme, under which the government will pay some 22% of the wages of employees who work at least one third of their usual hours.  This compares with the 60% of wages to be paid by the government in October, the last month of the furlough scheme. According to the Financial Times, the monthly cost of the new scheme might by around £1 billion, compared to £4 billion per month for

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Commercial property: * Prêt a Payer *, or Prêt-à-Fermer?

August 31, 2020

The government wants us to return to our office workplaces in the cities.   The FT tells us:
“The government will [this] week launch a media campaign to encourage more employees back to their workplaces amid growing concern in Downing Street over the rising number of job losses at service businesses in city centres that are reeling from a lack of customers.
And from Sky News (Aug 20):
“Just one in six workers have gone back to work in cities this summer after companies and staff ignored government pleas to return, leaving economic activity deeply depressed and placing thousands of small businesses at risk of collapse….[W]orker footfall in Britain’s cities was just 17% of pre-lockdown levels in the first two weeks of August.”
The Centre for Cities’ “High Streets Recovery Tracker” shows

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Commercial property: * Prêt a Payer *, or Prêt-à-Fermer?

August 31, 2020

The government wants us to return to our office workplaces in the cities.   The FT tells us:“The government will [this] week launch a media campaign to encourage more employees back to their workplaces amid growing concern in Downing Street over the rising number of job losses at service businesses in city centres that are reeling from a lack of customers. And from Sky News (Aug 20): “Just one in six workers have gone back to work in cities this summer after companies and staff ignored government pleas to return, leaving economic activity deeply depressed and placing thousands of small businesses at risk of collapse….[W]orker

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Our ‘scenario’ for UK GDP in 2020 (a 14% annual fall)

April 28, 2020

Source: ONS with our own estimation for 2020

The Wall Street Journal reported over the weekend (but not as a great surprise) that US GDP is likely to fall in the first Quarter –  before the main impact of the coronavirus hit – at the fastest rate since the global financial crisis: “This is just the beginning,” said Beth Ann Bovino, S&P Global’s chief U.S. economist, who estimates that GDP dropped at a 7.5% annual rate in the first quarter.  Also not surprisingly, the WSJ predicted far worse for April, and thus for Q2, and reminded of the extraordinary sudden rise in unemployment in the States: “By the end of March, over 10

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Confronting twin perils of pandemic and austerity – some lessons from 1920 & 2020

April 20, 2020

Extract from Resolutions of Brussels International Financial Conference 1920

SummaryThe UK is experiencing, as a result of the COVID 19 crisis and response, its most severe economic downturn on record; the largest in the last century was in 1921, when annual GDP fell by 9.7%.  In assessing the likely level of the fall, the Office for Budget Responsibility (OBR)’s “reference scenario” seeks to take account of previous pandemic experience. The OBR and Resolution Foundation draw on a recent research paper (Barro, Weng & Ursúa) which claims that Spanish flu-generated economic declines for GDP and consumption amounted “in the typical

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Ways & means of paying Government’s growing bills – financing or cashflow?

April 9, 2020

“The Bank has always held itself bound to the extent of its power to render the assistance required by the Treasury in any exigency and under any condition of the Money Market.” – James Currie, Governor of Bank of England, July 1885 to Lord Salisbury, Prime MinisterThe new agreement between Government and Bank of England to make the Government’s overdraft with the Bank (the Ways and Means Facility) open-ended has been characterised as direct “monetary financing” of government.  We don’t agree, at least for now. The Facility has however a long and valuable history of service, even if post-1998, with the “independence” of the Bank and establishment of the Debt Management Office, it has mainly been kept in hibernation.  It has stood at £370 million for most of the last

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Bailey goes up an inflation blind alley – but what role for BoE ‘monetary financing’?

April 7, 2020

This post argues that the new Governor of the Bank of England is wrong to address the Bank’s role in the crisis through the prism of traditional ‘price stability targeting’. Rather, the Bank’s duty and task is to support the government’s economic (including fiscal) policies, and in particular – and in so doing – to act to protect the financial stability of the whole system. Actions to support the Bank’s monetary and financial stability objectives need to be integrated.On 5th April, the Financial Times published an article by the new Governor of the Bank of England, Andrew Bailey, entitled “Bank of England is not doing ‘monetary financing’”, and with the curious subtitle, “We will protect independence of inflation targeting”. Now, the first – monetary financing – is

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The Treasury’s Budget Report breaks the law on fiscal rules

March 11, 2020

“The Treasury must explain the reasons for any departure from the previous mandate and/or supplementary targets.“ From the current Charter for Budget Responsibility’s fiscal rules“The Treasury may from time to time modify the Charter… When the Charter is modified the Treasury must lay the modified Charter before Parliament.”From the 2011 Budget Responsibility and National Audit Act 2011—————-There’s no getting away from it – in the manner in which it has put forward today’s Budget, the government – and specifically the Treasury – have acted in breach of the law.  The government’s Budget Report is required to set out how it is meeting the present, legally prescribed fiscal rules and targets. It has ridden roughshod over this requirement, instead laying down rules that –

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A farewell to ‘fiscal rules’?

March 6, 2020

Image: latest version of Charter including fiscal rules, put before Parliament January 2017

Dirty secrets? Yesterday (5 March) the Financial Times published an article by its economics editor Chris Giles, under the title “The Treasury has two dirty secrets on its fiscal rules”. Underneath that, the sub-heading read “What is the use of gleaming new hospital equipment if there is no money to pay staff to operate it?”.Now this is all rather amazing, given the degree of deference generally shown to ‘fiscal rules, Though this debunking is no doubt timely for new Chancellor Rishi Sunak – as he prepares

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Feeble UK productivity – it’s still down to austerity and lack of demand

January 31, 2020

Image with acknowledgment to https://www.flickr.com/photos/birminghammag/6798098618/in/photostream/

In his FT article yesterday (30 January), “The UK’s employment and productivity puzzle”, Martin Wolf says“The most important point is that the aggregate productivity performance of the UK economy since the financial crisis of 2007-08 has been its worst by far since 1860”. The key questions, however, are why this is so, and what to do about it. The ONS statistics do not take us back to the 1860s, but only to 1971.  We have calculated the average percentage quarterly change in labour productivity

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Rethinking Britain: the fundamental choice we face on December 12th

November 13, 2019

At stake in December’s General Election in December is much more than just Brexit, though Brexit in the form proposed would be damaging enough.  It is a fundamental choice of the kind of society we want to develop.  In September, “Rethinking Britain: Policy Ideas for the Many”, was published, of which I was co-editor. The book brings together the creative ideas – across a wide range of economic and social policy fields – for a revived Britain based on the principles of a progressive, future-focused social democracy.  Some 40 authors have contributed.I was given the challenging task of writing the introduction and conclusion to the book.  Below,

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Its new report blocked – so is the Office for Budget Responsibility really independent?

November 7, 2019

Cabinet Secretary Mark Sedwill has in our view acted unlawfully in ‘advising’ or ‘ordering’ the Office for Budget Responsibility not to publish its report on technical changes in relation to its March 2019 fiscal and economic forecast, due out today.  By giving way, the OBR has helped to undermine its own independence. The only winner is the Conservative government, which wants to avoid scrutiny of its economic policies during the election.The OBR’s website tersely states:“Publication of our restated forecast will no longer go ahead today following advice from the Cabinet Secretary.As we notified the Treasury and Treasury Select Committee on 29

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The Great Brexit Wrench

October 23, 2019

The Progressive Economy Forum today launched its new report, “The Great Brexit Wrench”, on the economic and political implications of Brexit. The report is by PRIME’s co-director Jeremy Smith, and looks at the background to and implications of Brexit from many different angles. It argues that there is no form of Brexit which will have a positive economic or political outcome. Brexit is however strongly backed by the pro-deregulation wing of British business – e.g. the business lobby organisation Open Europe — and the Conservative Party. Shadow Chancellor of the Exchequer John McDonnell described the report as “an excellent summary” of the

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UK Supreme Court – Johnson has ignored his “constitutional responsibility” as Prime Minister

September 24, 2019

So the UK Supreme Court (a bench of 11 judges) has delivered its judgment. Unaninmously. The prorogation of Parliament, based on the unlawful advice of Prime Minister Johnson, even if in form an act of the Queen, was null and void and of no effect.A couple of weeks ago, I concluded my post on The Rogue Prorogation and the English-Scottish judicial divide with these words:Whether the (UK) Supreme Court will be willing to go quite as far in making inferences of fact so adverse to the government as those drawn by the [Scottish] Court of Session, I have some doubts, even though I am absolutely sure those inferences are valid in reality. But at the very least, the Supreme Court should affirm the potential of judicial intervention if the true intent of a government (as

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The Rogue Prorogation and the English-Scottish judicial divide

September 12, 2019

As the pressures and contradictions of no-deal Brexit threaten the unity of the United Kingdom, further fissures are to be seen through the prisms of judical reasoning, in which English and Scottish judges view and interpet the world in utterly divergent ways.The English High Court (which included the Lord Chief Justice and the Master of the Rolls) has curtly dismissed the claim that the Prime Minister’s decision to seek prorogation of Parliament, for the five week period so shortly before the current Brexit deadline, was unlawful.  By contrast, the Scottish Court of Session (hearing the case on appeal) has held that the

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From Hammond on to Johnson – where next for fiscal policy?

July 21, 2019

As Mr Johnson takes over as Leader of the Conservative Hard Brexit Cult, and by virtue thereof as Prime Minister, it is timely to take a quick look at what his economic and fiscal policy options are – at least in the lead up to DD-Day (Do or Die) on 31st October. It’s equally important to take stock of Mr Hammond’s record as he quietly fades away after three years as Chancellor of the Exchequer.Johnson proposes tax cuts for corporates (reduction in corporate tax rate, already one of the lowest of major economies), and praises President Trump’s example:“He has been very clever in allowing businesses to offset capital

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Of vaulting ambition, Macbeth, and what GATT Article 24 actually says

June 25, 2019

Macbeth:I have no spurTo prick the sides of my intent, but onlyVaulting ambition, which o’erleaps itself,And falls on th’other. . . .Boris Johnson is a moral (or is it amoral?) coward, dispenser of racist remarks, teller of untruths, and general political fantasist. Driven by ambition and lust for power, he appears to have no principles to guide him save expediency and openness to self-serving opportunity. As to those screams in the middle of the night, here’s Lennox’s rather resonant description:The night has been unruly: where we lay,Our chimneys were blown down; and, as they say,Lamentings heard i’ the air; strange

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UK economy 2010-2018 – the devastating impact of the age of austerity

March 6, 2019

I’ve just been updating our data for GDP per head of population (from the OECD database plus adding the ONS estimate for 2018) and noticed a startling fact. The age of austerity, starting with the 2010 Coalition government, and on to the Cameron / May governments, has to date been the worst since records began for annual change in GDP per head . The average increase in GDP per head of population, from 2010 to 2018, inclusive is lower than the decade 2000 to 2009, i.e. the decade that included the impact of two terrible years of the peak Great Financial Crisis. From 1971 to 2007, the annual average percentage increase was somewhere between 2 to 2.5%. This includes the 1970s, with all its so-called stagflation, the Thatcher period of deregulation and

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