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Political Cacophony and the "Spring Statement"

Author

Listed:
  • Jagjit Chadha
  • Arno Hantzsche
  • Amit Kara
  • Garry Young

Abstract

Political deadlock and constitutional crisis does not necessarily spell economic doom. The UK economy is at full employment and in desperate need of investment to enhance productive capacity. But waiting for the outcome of this tortuous EU Exit process has produced an economic delay. Output is now some 2 per cent lower than otherwise as a result of the EU referendum outcome for precisely the reasons outlined by reputable economic analysis: (i) demand and supply have been driven down by an expected deterioration in prospects and (ii) the fog of uncertainty about those prospects has led to a delay in activity and capacity building. Even now no-one can be sure what will happen in terms of the EU and our future trading relationships. How should we approach monetary and fiscal policy at this time? Both arms of stabilisation policy need to articulate that they stand ready to smooth the adjustment to the democratically picked long-run income path.

Suggested Citation

  • Jagjit Chadha & Arno Hantzsche & Amit Kara & Garry Young, 2019. "Political Cacophony and the "Spring Statement"," National Institute of Economic and Social Research (NIESR) Policy Papers 11, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrp:11
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    References listed on IDEAS

    as
    1. Chadha,Jagjit S. & Crystal,Alec & Pearlman,Joe & Smith,Peter & Wright,Stephen (ed.), 2016. "The UK Economy in the Long Expansion and its Aftermath," Cambridge Books, Cambridge University Press, number 9781107147591, January.
    2. Jagjit Chadha & Arno Hantzsche & Adrian Pabst & Thomas Lazarowicz & Garry Young, 2018. "Understanding and Confronting Uncertainty: Revisions to UK Government Expenditure Plans," National Institute of Economic and Social Research (NIESR) Discussion Papers 495, National Institute of Economic and Social Research.
    3. Jagjit Chadha, 2016. "The UK Economy in the Long Expansion and its Aftermath," National Institute of Economic and Social Research (NIESR) Discussion Papers 473, National Institute of Economic and Social Research.
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