The UK’s labour market figures have sparked a lot of excitement – and a certain amount of confusion – on the hot topic of real wage growth. Here are six charts that explain what has happened and what it means.
The UK has spent years fretting about its dismal productivity performance in the wake of the financial crisis, but it’s no closer to figuring out what has gone wrong or what (if anything) should be done about it.
Perhaps it should look further afield. The UK is not the only place with a “productivity puzzle” on its hands: New Zealand is scratching its head too. For a developed country with seemingly supportive policies on tax, regulation and education, New Zealand’s workers are surprisingly unproductive, and they don’t seem to be improving very quickly either. Read more
By Roman Olearchyk and Lindsay Whipp
Ukraine’s economy and Kiev’s financial position were deteriorating rapidly even before the political crisis gripped the country last year. But as the interim government grapples with Russia’s annexation of Crimea, spreading separatist unrest in the east and gas bills that will almost double, Kiev is slipping closer towards financial breaking point. The government is awaiting a multibillion dollar loan International Monetary Fund and on Monday night the central bank raised key interest rates as it embarks on reform of the way it conducts its monetary policy. Read more
Many US citizens are proud of their Irish roots and have a great affinity for the Emerald Isle. In an otherwise rather dull International Monetary Fund fiscal monitor, this table might make them reconsider.
It shows the level of financial support given to banks in the financial crisis and the level of recovery to date. All the figures are in terms of percentages of national income so they show the relative burden of the support and the recovery. Read more
(c) Getty Images
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
Britain’s finance minister George Osborne is off to Washington this week to give an “I told you so” speech about the merits of his austerity programme.
But if a paper to be presented today is to be believed, the credit for lowering Britain’s budget deficit should really go to his Old Etonian boss David Cameron. Read more
Last Friday marked the one-year anniversary of QQE – the aggressive monetary easing regime launched by Bank of Japan governor Haruhiko Kuroda. Under the new policy, dubbed “quantitative and qualitative easing,” the BoJ hoovers up just about every long-term bond the market is offering, with the aim of keeping interest rates low and stable enough to drive investors into riskier assets.
So far it has mostly done the job, with the currency down, stock markets up, and signs of a pick-up in lending. Meanwhile the drop in the yen has pushed core inflation to 1.3 per cent – apparently on course to hit the 2 per cent target within the original time-frame outlined last April.
But over the weekend Twitter seemed more interested in a long speech by Masaaki Shirakawa, Mr Kuroda’s predecessor, delivered last September but published (with footnotes) last week on the Bank for International Settlements website. Read more
Guest post by Eswar Prasad, Karim Foda, and Arnav Sahu on the latest Brookings Institution-Financial Times Tracking Indices for the Global Economic Recovery (Tiger), which combines measures of economic activity, financial variables and indicators of confidence
The global economic recovery remains uneven and wobbly but finally appears to have built up some staying power.
The worst may be over, but prospects for a durable and sustained recovery hinge on whether national governments demonstrate their commitment to substantive structural reforms.
The Brookings-FT Tiger index shows advanced economies are gradually gathering growth momentum while emerging market economies are cooling off. This has led to some degree of convergence in the short-term growth prospects of these two groups of economies. Reflecting this, financial markets in emerging economies took a beating in recent months, although equity markets in some countries like India and Indonesia are on the rebound.
George Osborne has today made a pledge to restore Britain to “full employment”. It is not at all surprising that the chancellor is setting his ambitions in terms of jobs because that is the one area of the UK economy that has performed extremely well over the past four years.
Economic growth has disappointed as the economy stagnated in 2011 and 2012. Living standards are well below 2010 levels even with the growth that has been achieved. Tax revenues are causing concern across government because they are persistently weak. And productivity – output per hour worked – has been close to the worst among advanced economies, raising big and difficult questions over Britain’s ability to sustain rises in living standards once unemployment has returned to normal levels.
But what does Mr Osborne think constitutes full employment? Here are some possibilities.
Forget George Osborne’s speech; ignore Ed Miliband’s response. Politics does not tell you anything about the nation’s finances. These charts do. The big message is that the public finances in Britain were terrible, are terrible and still need lots of work to repair the damage.
1. The deficit is still terrible
Borrowing is falling and public sector debt is not rising so fast, but these facts are small comforts. The big picture is that Britain is still borrowing hugely – more than almost any other advanced economy – and will do so for many years to come.
The good news from the red line is that the borrowing outlook is better than a year ago, but still falls short of expectations in the 2012 Budget.