Those hoping for a rapid pickup in UK productivity shouldn’t hold their breath.
That’s the message from a new Bank of England paper which suggests the UK’s dismal figures are more likely to be the result of “persistent effects” from the financial crisis, rather than temporary, cyclical factors which will fade away as the economy recovers.
Just under half (around 6 to 9 per cent) of the UK’s productivity gap can be explained by the hypothesis that the crisis resulted in underlying damage to the UK’s productive capacity:
Institutional weaknesses are mainly to blame for Greece’s dire trading performance, with exports around a third smaller than they should be, according to a new paper from staff at the European Commission.
Aside from being the world’s largest shipping nation, Greece sits at the cross road between three continents and on one of the world’s busiest sea routes.
Yet, researchers estimate its exports are approximately 33 per cent lower than would be expected based on the size of the Greek economy, its trading partners and its geographic position. The Commission staff dubs this “the puzzle of the missing Greek exports.” Read more
It’s crunch time for the ECB. After more than six months of talking, the governing council has finally eased policy:
- Deposit rates have gone negative decreasing by 10 basis points to -0.10%
- The main refinancing rate has been cut by 10 basis points to 0.15%
- The marginal lending facility rate has been cut by 35 basis points to 0.40%
The changes all take effect from June 11
ECB president Mario Draghi will take questions from the press at 1.30pm to explain the thinking behind the cuts
Follow all the action and market reaction here with economics reporter Emily Cadman and Lindsay Whipp in London, with Eurozone economy correspondent Claire Jones in Frankfurt.
It’s official: money can buy you happiness. Or more precisely, having money to spend can.
That’s the conclusion from a new piece of analysis by the ONS which looks at how household spending correlates with self-reported levels of well being in the UK. Read more
French academic Thomas Piketty has issued a detailed response to criticism by the Financial Times of his work on inequality, saying it is “simply wrong” to suggest he made errors in his data.
The best-selling author of Capital in the Twenty-First Century, which has ignited an international debate on trends in inequality, said “the corrections proposed by the FT to my series (and with which I disagree) are for the most part relatively minor, and do not affect the long run evolutions and my overall analysis”. Read more
This morning’s dovish inflation report press conference dampened market expectations of an early rate rise. Here are some of the reasons the Bank believes there is still someway to go before a rate rise is needed:
1. Labour market slack Read more
Welcome to our live coverage of ECB president Mario Draghi monthly press conference. Earlier the ECB kept its benchmark interest rate on hold at its record low for the sixth month in the row, despite weaker than expected inflation. Follow the questions and reaction live here with capital markets editor Ralph Atkins and economics reporter Emily Cadman.
Despite politicians of all hue stressing the importance of business lending in rebalancing the economy, net lending to UK businesses has now been falling for nearly seven years, according to the Bank of England’s latest Trends in Lending report.
For consumers the picture is very different: mortgage lending is on the up, as is unsecured lending (such as credit cards).
But before assuming this means a consumer debt-fuelled recovery is underway, it is worth taking a look at how low levels are by historical standards – and signs business lending maybe starting to return.
More than five years after the start of the great QE experiment, agreement about what the asset buying scheme achieved is still thin on the ground. A new Bank of England paper from external MPC member Martin Weale released today tries to put a figure to how much QE boosted national output and inflation in the UK and the US. Its results are as follows:
“At the median, an asset purchase shock that results in an announcement worth 1% of nominal GDP, leads a rise of about .36% (.18%) of real GDP and .38% (.3%) in CPI in the US (UK). These findings are encouraging, because they suggest that asset purchases can be effective in stabilising output and prices” Read more
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Looking for a cheap flight to jet off to warmer climes over Easter? This time you may have left it too late.
The best window for cheaper fares – on Ryanair at least – is between 21 and 14 days prior to departure, according to a new academic paper by Marco Alderighi at Bocconi University, Marcella Nicolini at the University of Pavia and Claudio Piga at Keele University set to be presented at the Royal Economic Society’s conference on Wednesday.
Researchers scraped the Ryanair website to build a database of how fares change as the date gets closer and the plane fuller, looking at over 80 routes of flights departing from the UK. Read more