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Jeremy Smith

Articles by Jeremy Smith

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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Brexit Agreement: a bad deal, a worse Protocol – time to consult the people!

November 15, 2018

The main body of the draft Withdrawal Agreement is certainly long and detailed – a tribute to the efficiency of the EU’s legal services – but it mainly contains the sort of provisions one would expect for the terms of the separation, and for issues that straddle the departure timeline.  There is a transition phase to 31 December 2020, which can be extended, when EU law continues to apply, and the European Court of Justice still has jurisdiction. Citizen’s rights (relating to residence etc.) are – it seems properly – dealt with at length. The financial deal is more or less what one would expect on leaving the ‘club’ in such circumstances.  There is provision for resolving problems and disagreements.  If there has to be a Brexit, none of this is really controversial.The

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The EU’s dysfunctional fiscal rules empower the far right, both in Italy and elsewhere

October 31, 2018

PRIME’s co-director Jeremy Smith and Progressive Economy Forum Council member John Weeks analyse the “bar room budget-brawl” between the Italian government and the European Commission, and argue that the Commission’s wrong-footed response threatens to strengthen the far right – to avoid opening the door to fascism, the EU must ditch its bias towards austerity.No one doubts that Italy’s economy is in a mess. It has been for a long time. It was not always so. From 1971 until 1992, income per capita increased on average by 2.7% per year. Among G7 countries this was second only to Japan, and ahead of Germany and France. Since then, the position has dramatically reversed – with a post-1992 average growth rate (also GDP per head) of just 0.4% per year.Since 2000, broadly

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The slowing economy of the Single Market and NAFTA era

October 12, 2018

Ten years on from the full explosion of the Great Financial Crisis in autumn 2008, and Brexit lurking just round the corner…  A lot of the Brexit arguments revolve around the perceived pros and cons of the EU’s Single Market; meanwhile, President Trump has been using force majeure to overturn aspects of the 1994 NAFTA deal. Given this conjuncture, I thought it would be instructive to take stock and assess, over a longer time-frame, how the UK and other developed economies have performed from an overall macroeconomic perspective. To do this analysis, I have taken a group of ten “developed economies”, comprising the G7 plus three northern European countries, Denmark, Sweden and the Netherlands, and compared them since 1971, when the OECD dataset begins, in terms of the

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What Question(s) for a “People’s Vote” Referendum?

September 25, 2018

The calls for a “People’s Vote” on the government’s proposed Brexit ‘deal’ (if indeed there is one) grow louder, but are especially contentious for the Labour Party, whose membership is more minded to “remain” than the public at large, which still seems fairly evenly split. But the call for a People’s Vote is not so straightforward, partly now in terms of timing and Parliamentary arithmetic, but above all since it poses the tough question – what question to ask the People to vote on? Or indeed what questions, plural?For some, the answer seems simple.  Take the economist Simon Wren-Lewis, who in a blog post today (25 September) argues:“So what

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How Polanyi best explains Trump, Brexit and the over-reach of economic liberalism

December 31, 2017

Image via Wikipedia – fascists attack police, February 1934, Paris

It’s good to see the latest (21 December) New York Review of Books give space to a review – by Robert Kuttner of American Prospect– of a biography of "Karl Polanyi: a Life on the Left" by Gareth Dale.  For as we have been arguing for a long time, it was Polanyi who better than any other historian / analyst got to the heart of the contradictions of free market globalised liberalism, and saw that it was such economic liberalism, pushed too far, that is likely to lead to authoritarian, or even fascist, outcomes.As Kuttner puts it,“Global

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The Shadow Chancellor and the government’s debt interest payments

November 26, 2017

The following is a statement in response to recent media comment on the public finances, signed by 22 economists as at 26th November, 2017It can be downloaded here as a pdf. Andrew Neil of the BBC Politics programme recently challenged the Shadow Chancellor, John McDonnell, on the likely cost in interest payments of additional public borrowing. He suggested that current debt interest payments are estimated at £49 billion, and rising. His use of £49 billion was misleading, as it included £9bn owed by the Treasury to the Bank of England (BoE). Because the Bank is part of the public sector, £9bn is in effect owed by government to itself, as the Office of Budget Responsibility (OBR) explains.[1] The government’s debt interest payments are therefore £40bn.But the £40 billion is

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The UK since 2007 – an economic record of comparative mediocrity

September 6, 2017

We know that the UK economy has remained in a rut, plagued by foolish austerity and declining real wages, since the great financial crisis.  We know too that the Eurozone suffered its own, largely self-imposed, economic stasis or decline – notably from 2010 to 2015, with unemployment over 10% till late last year.So I thought it could be interesting to look, in a simple way, at the performance of a set of mainly developed economies, in Europe plus a few from other parts of the world, and compare their progress – or lack of it – over the 10 year period 2007 (representing the pre-crash peak for many countries) to 2016. And then see where the UK sits in comparison with others.I have added China and Poland as examples of what is happening elsewhere, in economically relatively

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The best UK/EU transition plan? If we can, extend the Article 50 period

August 3, 2017

On 30th June 2016, just one week after the EU Referendum, I wrote this:It has swiftly become clear, if it were not already so, that neither the government nor the leaders of the Brexit campaigns had anything resembling a plan for what to do if the people voted in favour of leaving the EU.  As Mark Carney rather mordantly put it in his speech today,“In Tim Geithner’s famous dictum, “plan beats no plan.” And in my experience, a plan that is clearly articulated and transparently executed is best of all.”In other words, addressed to the off-stage Brexiters, but also to the government whose decision it was to hold the referendum, “you’ve dumped us

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The decline and fall of real pay under the UK’s “flexible labour market” system

July 12, 2017

The Taylor “Review of Modern Working Practices”, published on Tuesday, is a fundamentally complacent document:“National labour markets have strengths and weaknesses and involve trade-offs between different goals but the British way is rightly seen internationally as largely successful.”True, the report expresses a number of reasonable aspirations and contains a number of sensible but gentle proposals, but it fails to come up with any strong proposals for dealing with the real problems faced by insecure workers in the UK today.  It does not even make the obvious recommendation, to remove the big court fees now imposed on workers wishing to challenge their employer in an industrial tribunal.  And while noting that the UK labour market suffers from weaknesses such as real wage

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The gaping contradictions in EU bank bail-out law and policy

June 26, 2017

The EU’s hugely complex banking resolution framework is generally supposed to have one key goal – to ensure that failing banks are ‘resolved’ without recourse to public bail-outs, thereby breaking the link between private banks and sovereigns…  The reality, we have seen today, is quite different – and, it seems, legal!  The EU can just about argue that technically, the rules have not been broken – but overall, the appearance is of a policy in logical disarray once again.After all, the whole purpose of EU banking resolution policy has been to prevent large tax-payer injections into stressed and failing private banking institutions – and instead, to ensure that the private sector investors take the financial pain. But the European Commission has, in conjunction with the

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OECD ignores deficit hawks, backs higher public investment in infrastructure & people

June 7, 2017

The Financial Times’ economics editor, Chris Giles, has had a busy few days. He has written several interesting articles, covering the absence of “the deficit” as a big election issue (as a hawk he’s really not happy about that), the OECD’s new forecast for the UK economy, and the marked similarities between the economies of France and the UK.  (More on this last, in a later post). Giles also found time to tweet, when asked why he had not referred to the 130 economists’ letter to the Observer (expressing broad support for the Labour Manifesto economic plans), that it was “disregarded because the 130 are not representative of

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Brookings dance to Trump’s tune on US government interest payments

May 28, 2017

I was looking at my Tweetdeck this morning when I came across this tweet from the Brookings Institution:

Now it is clearly a Good Thing in principle for the US Federal government’s budget to be explained in clear and simple ways, but why – I asked myself – do Brookings choose to concentrate today on interest payments (which form just 6% of outlays) rather than the programs that President Trump wants to cut to shreds?  I clicked on the link and found this in their explainer:“WHY DO WE SPEND SO MUCH ON INTEREST?The government has borrowed a lot: The federal debt held by the public amounted to slightly over $14 trillion by the end of 2016, a sum

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