Economics

In a recent piece Stephanie Flanders, the BBC’s economics editor, pondered how the UK economy could be adding jobs while, according to the figures, shrinking by 0.7% during the second quarter of this year. As she put it, this is a conundrum that “Britain’s finest economic brains simply cannot explain”. Well, I can’t explain it either. But, perhaps because I’m not any kind of economic brain, I wonder if all this measuring and collecting of information now does as much harm as good. In one sense, of course, it seems obviously good that government collect data so it knows what’s going on. But that comes at a price: it encourages

While our economy was contracting by 0.7 per cent, America’s was growing by 0.4 per cent, according to the first estimate just released by the US Bureau of Economic Analysis. But, as the graph below shows, those 2012 Q2 figures just represent a continuation of the divergent economic paths the two countries have been on since 2010. In America: steady if unspectacular growth. In the UK: stagnation followed by a second recession. P.S. The Americans report GDP figures as ‘annualised growth rates’ — that is, the percentage GDP would grow by if it grew for a whole year at the same rate as it did in the quarter — which

Today’s GDP figures are far worse than expected. They mean that the economy has now shrunk for three consecutive quarters. The figures have destroyed the optimism created by the fact that employment and tax revenues are rising. Politically, these figures are undoubtedly a blow to the coalition. Labour is out trying to pin the blame for the continuing recession on the government’s economic policy. The Treasury is countering that the figures confirm that ‘the country has deep rooted economic problems’. In a sign, though, of how serious the GDP fall is, the government is conspicuously avoiding suggesting any external reasons for it — such as the Eurozone crisis, the weather

Milton Friedman would have been 100 later this month, and there is likely to be much commemoration – much of it nostalgia for an era where the right had a clear idea about how to get out of the mess the left had left. I always believed that Friedman’s ability to articulate – his gift for aphorisms and jokes – was his greatest single talent. The arguments for the basics of human liberty are made all the time, but no one has quite made them with as much force and effectiveness as Friedman. His 1970s series Free to Choose remains, in my view, the most powerful TV documentary ever filmed

‘I’ve never seen a government document with a Laffer curve in it before’, declared Ed Balls last week. Well it looks like he might be seeing a lot more of them, if George Osborne gets his way. Yesterday, as James noted, the Chancellor told the Treasury select committee that: ‘I think the Treasury can now, and I’ve asked this to happen, start undertaking some real research into dynamic scoring, and what the broader economy effects are of changes to taxation’. Now, it’s hard to get all that excited about something with a name like ‘dynamic scoring’. It was never going to make the front pages, especially when there’s a ‘pasty

Will George Osborne have a better chance to abolish the 50p tax than this month’s Budget? It would be unpopular, so it’s the kind of move he’d be unlikely to make before an election. The Lib Dems have something they want to trade: permission to raise the tax threshold towards £10,000. And two recent reports, by the CEBR (pdf) and IFS (pdf), have reinforced that this tax is losing money. At the heart of the 50p tax is a deeper question: is Osborne a transformative Chancellor who will change the terms of debate? Or is he doomed to operate within parameters set by Gordon Brown? I look at this in