On Friday, the credit rating agency Fitch downgraded the UK’s sovereign credit rating by one notch, from AA to AA-, citing worries about the economy and a jump in government debt. Bond investors at least are shrugging this off. But the announcement has revived long-standing concerns about the role of rating agencies during crises, and … Continue reading Don’t shoot the rating agencies!
Category: Applied economics
Given that even ‘profit’ now seems to be dirty word, it is no surprise that being accused of ‘profiteering’ during a crisis is about as bad as it can get. But there are some circumstances when an increase in prices in response to exceptional demand can actually be a good thing. By definition, ‘profiteering’ is … Continue reading Can ‘profiteering’ ever be justified?
No-one can have failed to notice the half-empty supermarket shelves and long queues for essentials. Loo rolls even rivalled flowers as the Mother’s Day gift of choice. Fortunately, this is one phase of the coronavirus crisis which should be over soon. There appears to be a marked difference between what people say is socially acceptable … Continue reading The economics and ethics of panic buying
The coronavirus job retention scheme is the biggest step the Chancellor has taken so far, both in terms of its nature (subsidising the wages of millions of private sector worker) and cost (potentially many tens of billions of pounds). This raises three questions. Is this degree of state intervention justified? What more is needed? And … Continue reading ‘Intervention is essential, but does not signal a socialist state’
In normal times, a welfare system based on handing out cash to almost everybody, whether they need it or not, would be far too expensive, poorly targeted, and distortionary. I’m therefore still opposed to a permanent ‘Universal Basic Income’ (UBI). But these are not, of course, normal times. There is a much stronger case for … Continue reading Universal Basic Income – revisited
How hard will coronavirus hit UK GDP? This may seem like the wrong question to ask in the midst of a health emergency. The new coronavirus outbreak is a social crisis above all else. Even in narrow economic terms, some sort of hit to GDP is inevitable and even desirable: we actually want many people … Continue reading UK economy makes a handbrake turn
I’ve not said much about the impact of the new coronavirus, partly because it’s a human tragedy and commenting on the economic and market implications can seem insensitive. It can also be hard not to appear complacent. But given the mounting concerns, reflected in the sharp falls in global equity prices in the past week, … Continue reading First thoughts on the coronavirus outbreak