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Tag Archives: Spectator

Theresa May is warning Tory rebels that if Parliament gets a meaningful vote on Brexit, the European Union will be “incentivized” to offer the UK a “bad deal”. She is right, of course.

But that doesn’t mean the Prime Minister should dismiss the prospect of the House of Lords inflicting a second defeat on the government, with peers today set to back an amendment requiring Parliament to endorse the UK’s final Brexit deal. May should, in contrast, turn what seems like an inconvenience to her political and diplomatic advantage.

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‘Did you really deserve the Nobel prize?’ I ask Amartya Sen. ‘Why do you think you won?’ When you’re sitting opposite the world’s most respected living economist, at a time when the dismal science is under intense scrutiny, an opening question should be punchy.

Thankfully, Sen, an 83-year-old Harvard professor, has a sense of humour. ‘You can’t ask me that,’ he says while laughing warmly. ‘I have absolutely no idea why I won.’
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“Prefabs to solve housing crisis,” screamed the front page of The Sunday Telegraph last weekend. Can Britain’s housing crisis really so bad – that ministers are now floating plans to encourage the first new generation of temporary, pre-packed houses since the great reconstruction drive which followed the Second World War?

The UK is certainly in the midst of a housing shortage that numerous credible experts now describe as “chronic” and “acute”. While it’s widely recognised we need 250,000 new homes each year to meet population growth and household formation, house-building hasn’t reached that level since the late 1970s.

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What should we think about negative interest rates? What kind of Alice-in-Wonderland world are we living in when companies and households are paid to borrow and charged if they save?

Seemingly crazy, negative interest rates are spreading nonetheless. Implemented by central banks in Europe, Japan and elsewhere, they now apply in countries accounting for a quarter of the global economy. Should we be worried? Could we see negative rates in Britain?

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It has been a month since the UK voted to leave the European Union — but something is missing. Where is the economic collapse? What of EUpocalypse Now? Where is the Brexageddon that we were promised?

To the shock of many — not least business titans who bankrolled the Remain campaign — the instant collapse doesn’t seem to be happening. The UK economy is, for now at least, taking Brexit in its stride.
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Boris Johnson famously said Winston Churchill would have voted for Brexit. The wartime leader’s grandson – staunch Remainer and Tory grandee Nicholas Soames – dismissed such claims as “appalling” and “totally wrong”.

This bad-tempered referendum rift between two traditionalist, Etonian Conservatives symbolizes, somewhat incongruously perhaps, the broader state of the nation. Deep and traumatic divisions have emerged between friends and families everywhere – and, of course, within political parties.
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‘For ten years or so, my name was “that jerk”,’ says Professor Richard Thaler, president of the American Economics Association and principal architect of the behavioural economics movement. ‘But that was a promotion. Before, I was “Who’s he?”’

Thaler has had to get used to putting noses out of joint. His academic research, initially controversial, sparked an entirely new branch of economics, and now governments are adopting his theories across the globe. But he met plenty of resistance along the way. ‘You get your ideas straight when you argue with those whose views are most different from yours,’ he says.
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“What is a Minsky Moment, anyway?” asks Gerry Stembridge, a razor-sharp Irish comedian. “I’ve been reading about them in the papers and have often wondered”. Stembridge is putting the question to Paul McCulley, Chief Economist at Pimco, the world’s largest bond fund with over $200bn under management. Among the ten most influential economists on earth, McCulley is sporting a T-shirt and jeans.

If that’s not odd enough, the two men, Celtic comic and American financial whizz, are on stage in a theatre in Kilkenny, a bijou provincial city in South-East Ireland. It’s Saturday night and they’re facing a sell-out crowd – all of whom have paid to watch a debate on global economics and most of whom aren’t waiting until the interval to have a drink.

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After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a sanctions rapprochement. The eurozone economy is suffering badly and sanctions are partly to blame. Winter is also upon us, and that reminds everyone Vladimir Putin still holds the cards when it comes to supplying gas.

The clincher, though, is that Kiev is in a deep financial hole and fast heading towards financial meltdown. Unless an extremely large bail-out is delivered soon, there will be a default, sending shockwaves through the global economy. That’s a risk nobody wants to take – not least in Washington, London or Berlin.
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