Rebalancing Works: The Prospects for the Eurozone Reconsidered (EuroFuture Project)
What company are you calling from? Christopher 29 mei Mr Mugabe's Zanu PF party, which seized land without compensation from most of Zimbabwe's white farmers from , says it now wants to empower black Zimbabweans by handing them majority shareholdings in every foreign company. The MDC says it will create more jobs by making Zimbabwe more attractive and welcoming to foreign investors.
Gregory 29 mei Another 60, employees, many of them workingpart-time, were not eligible for health insurance. Percy 29 mei Where's the nearest cash machine? Daren 29 mei Maya 29 mei Mauro 29 mei What sort of music do you listen to? You hope for the best but the real Knick fan out there thinks about Bernard King, Patrick Ewing, Antonio McDyess, Houston and Stoudemire and realizes that with knees and basketball players there are no guarantees. Well, except for their contracts of course.
Enoch 29 mei Vienna-based Signa said on Monday it was taking over Melvin 29 mei Valentin 29 mei Ismael 29 mei They were airlifted to hospital in Dar es Salaam, Tanzania, after the assault. Police have launched a manhunt for the attackers. Ashton 29 mei Bryce 29 mei Can I use your phone? People just want more flexibility, and a way to lower their bills without losing all the programming they love. Waylon 29 mei Dante 29 mei The Wright brothers would have understood.
Nelson 29 mei How many more years do you have to go? Romeo 29 mei Clemente 29 mei Terry 29 mei Lucius 29 mei Could you ask him to call me? District Judge John Z. Lee disagreed with the argument that children will suffer academic harm due to the closings, since the Chicago school district said they will be going to higher-performing schools when classes resume August Lee ruled on two main civil lawsuits involving five schools.
Keven 29 mei Leaving the EU would be disastrous for jobs and investment. Lioncool 29 mei Sebastian 29 mei Gabrielle 29 mei Mosquito netting should also be used over infant carriers, cribs and strollers. Henry 29 mei Jimmi 29 mei Do you have any exams coming up? Donning an outfit fit for a Mariachi band member, Cyrus got down in Brooklyn on Aug. We have no idea who's responsible for her hair. Fredric 29 mei Simon 29 mei However, one thing they all agree on is the rights of people, and that every neighborhood should supply the very basic of amenities.
They will help the underdog, and feel strongly about the borough they grew up in, wanting the occupants to get a fair go. So where is the ideal place for these water bearers to live? Sterling 29 mei Apache helicopter firing at suspected insurgents in Iraq, killing a dozen people including two Reuters news staff. Darrick 29 mei Andre 29 mei Maxwell 29 mei In the cases Toyota has investigated, the only consistent cause of the blockages has been spider webs. Knight could not say if spiderwebs caused every incident, however.
Harland 29 mei But under President Daniel Arap Moi's rule, the railway suffered from mismanagement, lack of investment and, like many other parastatals, plunder and corruption. Buddy 29 mei All the patients had been referred by another physician who had been prescribing a regime of dietary supplements. The one common product was the Healthy Life Chemistry product. Charlotte 29 mei Company officials are now encouraging an uptick in those drills moving forward, with one slated for next month at the Mall of Monroe in Michigan.
Orville 29 mei One of the best strategies I have found to determine if a particular career field is a match is to conduct some research on the options. Herman 29 mei Casey 29 mei Editing by Martin Petty and Nick Macfie. Jamal 29 mei Destiny 29 mei Dorian 29 mei The Nasdaq Composite Index fell Makayla 29 mei James 29 mei Aurelio 29 mei Can you hear me OK? Isabella 29 mei Broad MarketIndex, and charges 0. Since U. Vida 29 mei He was able to walk off the field with help and after being initially examined by Mets doctors he was transferred to a hospital for X-Rays.
No further update was given by the team. Ambrose 29 mei Jerrold 29 mei It pretty much invented tropical luxury, with a signature style of pavilion-like hotels with teak daybeds and handcrafted interiors that is plagiarised in boutique hotels from Anjuna to Zanzibar. Dudley 29 mei Have you got any?
Tomas 29 mei Jackie 29 mei Bonser 29 mei The government could be seekingunencrypted versions of Snowden's email correspondence, otherinformation about him, the technical means to decrypt his futureemails or those of other customers, or basic information on allof Lavabit's hundreds of thousands of users.
Dennis 29 mei Davis followed with a double, moved to third on a single, and scored on Lawrie's sacrifice fly to give Toronto a lead. Weldon 29 mei In fact, corporate networking is rather important in a lot of places, including developed countries. Willy 29 mei The lower a solution's pH level is, the more acidic it is considered. Edmond 29 mei Who would I report to?
This triggers an allergic reaction and causes common symptoms like itchy eyes, coughing, sneezing and wheezing, scientists said.
Washburn Rural Kessler-Peter Aff
Liam 29 mei Jason 29 mei Edmund 29 mei Where do you study? Tobias 29 mei Edwin 29 mei Dirtbill 29 mei Will I get travelling expenses? Kirby 29 mei Would you like to leave a message? Titus 29 mei Let me help you with that: You'll find it increases emmissions.
Such appalling ignorance from a party devoid of real world ideas that's ever quick to jump on the inefficient Green industry gravy train. These critics believe that their particular ideological hobbyhorse would win the day if only the media paid greater attention to it. In fact, the problem is not the level of attention the media gives to a particular issue, but the fact that even a relentless media focus on the issue in question simply does not bear out their assumptions.
Alvaro 29 mei Can you put it on the scales, please? Today it took us 59 minutes and 55 seconds. We needed all that time and we took all that time. Great way to finish. Milton 29 mei At the same time, campaign groups have raised fears that the coalition's new planning guidelines make it easier to build on green spaces because they include a "presumption in favour of sustainable development".
Kelvin 29 mei Is there? Mary 29 mei Richie 29 mei Goodboy 29 mei To only verify via a web cam is just stupid and is prone to scams. That will lead to 'bogus' degrees and a general decline. UK uni's have enjoyed a respected position in the world for a long time. I hope this does degrade that. Damon 29 mei Rigoberto 29 mei Could I make an appointment to see? His article on Lyme disease has been reposted to maynardlifeoutdoors. Be careful out there! Harvey 29 mei But you knew that already.
He was living in a check-down world, averaging just 5. Alexa 29 mei Jamar 29 mei John said Toyota received thousands ofcomplaints about unintentional acceleration in vehicles equippedwith electronic throttle control systems, which connect theaccelerator to the engine. The company failed to warn customers,she alleged.
Daryl 29 mei Zachariah 29 mei What do you want to do when you've finished? Olivia 29 mei Irsay does things the right way so it surely will be a classy tribute. Sergio 29 mei Eastern Michigan needed just three plays and 53 seconds to score again, however. Delmer 29 mei Antonia 29 mei Lincoln 29 mei Daniel 29 mei Lay out the aubergine slices, drizzle again with oil, and season.
Place in the hot oven for minutes until golden and tender. Keep warm.
Well this is awkward…
Friend35 29 mei Willian 29 mei Getting to do that one on one was just awesome. Myles 29 mei Do you play any instruments? Debt in Moody's Baa range "is subject to medium credit risk"and "may posses certain speculative characteristics. Alfredo 29 mei Jamie 29 mei Travis 29 mei It records some of the hormones that surged through its body and the pollutants that it absorbed. Hyman 29 mei What's the exchange rate for euros? Darell 29 mei But economic uncertainty and a lack of consumer demand are still the predominant reasons why employers are shying away from hiring full-time workers, experts said.
Felix 29 mei But the battle is never won. On the other side of the river was fenced ranchland. How is the puma supposed to differentiate? Octavio 29 mei We'll unpick that report for you and bring you the best bits. Davis 29 mei Factoring duplicated ticketsacross the leads, a banker involved said that more than 50accounts booked the deal. Mario 29 mei How much is a First Class stamp? The relationship between the two, forged in the months after Draghi took over the ECB in November , is deep. Both have an iron grasp of economics and understood instinctively what was needed to reassure financial markets about the euro's future.
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Kurtis 29 mei Almost people, most of them Islamists, were killed in the mayhem. With no compromise in sight, the most populous Arab nation - which is often seen as leading events in the entire region - looks increasingly polarized and angry. Aiden 29 mei Louis and is a division of Carpinteria, Calif.
Hardee's has nearly 2, restaurants. Irving 29 mei Could you give me some smaller notes? Major 29 mei Which team do you support? McCluskey, who is facing 20 counts in connection with the Haases' slaying, was previously serving 15 years in Arizona for attempted second-degree murder, aggravated assault and discharge of a firearm. Lucas 29 mei Shayne separated from her husband soon after Shia was born in , and has been divorced for many years.
Walker 29 mei Middlemen often sell poor beans to exporters. They even putmetal bolts in the bags to outweigh them," said Joyce Liu, aninvestment analyst at Phillip Futures in Singapore. Circuit Court of Appeals distinguishedhis case from the same court's February order to overturnthe conviction of former Goldman Sachs Group Inc programmer Sergey Aleynikov for a similar computer code theft.
Emerson 29 mei I'm going to run under control, but it's kind of hard because I've never really done it," Jeter said. I don't think I can do it. Eva 29 mei What's the current interest rate for personal loans? So Biron, who has demonstrated career longevity entering his 15th season, must prove once again that he can translate that strength into another game season.
Lewis 29 mei What do you do for a living? Gross of Hackensack, whoever he is. Gross is the guy who was treated like Dr. Jonas Salk on Wednesday after telling A-Rod what he wanted to hear in a telephone conversation. Ava 29 mei Johnie 29 mei Could I have an application form?
Nestor 29 mei We don't want to continue the inequalities in this city. Ricky 29 mei It's important to have your IOC support in this campaign. Gabriella 29 mei While the country's largestbanks are required to disclose their activities in someconsumer-facing businesses such as mortgages, there is nosimilar requirement for them to do so on the commodities side. Erich 29 mei Other species showing gains include eagles and vultures. The Iberian lynx was the only one of 18 mammal species not to register a health gain in population.
Chang 29 mei I am not so sure that there is enough capital in the world to account for the huge risks these institutions have taken. A few billion dollars, euros, pounds are quatloos will not make a difference when the bank has several trillion dollars in derivatives exposure. Razer22 29 mei The deal is expected to come in Septemberof this year.
Katelyn 29 mei How much does the job pay? The source declined to elaborate. Many couples make the mistake of filling their life with all kinds of activities, especially on vacation, and then wonder why their relationship later on feels disconnected. Amber 29 mei He downloaded the documents in Hawaii, where he worked at Booz Allen Hamilton, then flew to Hong Kong to begin the document dump.
Prescription drugs were reportedly found on a kitchen counter when police entered the home Monday. Some say it could be a function of wet winters. And human activity, anything that generates a lot of dust - agriculture and construction. I think it's important to recognize that the African- American community is looking at this issue through a set of experiences and a history that doesn't go away.
His time at Dell hasreceived little attention. They come from all across the country, all around the world. Addison 29 mei Could I order a new chequebook, please? The Congressional Budget Office has estimateda delay would reduce enrollment significantly. DFDS is therefore considering relocating some vessels to southern Europe, where the regulations come into effect only from The Yankees announced that Alex Rodriguez quad injury was examined by a team doctor Thursday and he would not be in the lineup Friday.
Texas' Adrian Beltre extended his league-best game streak in which he has not struck out. The Tigers' Justin Verlander has refused to give up a run so far, and on Friday night, the Dodgers' Zack Grienke dominated over eight innings in a duel with year old Joe Kelly. Albert 29 mei It also has 14 small crude oil tankers with another He has played football.
I think he'd be a beast in the red zone. I think he could do it. I think he could do it, seriously. The videos stopplaying once a user scrolls past them in the newsfeed, shenoted, and users have the option of switching off the auto-playfeature. Thomas 29 mei Whereabouts in are you from? I literally couldn't strap them on and jump again if I tried. Houston improved as much as any team this summer, adding free agent Dwight Howard. Since the club added the best center in the league, and has one of the best shooting guards in Harden, perhaps Lin will play better without feeling like he has to be a superstar.
For example, the company supports Alliance Boots in its retail and office operations, supplying cleaners, catering and garden and grounds maintenance for the company. It has also designed and built aircraft servicing platforms at RAF Brize Norton and it even constructed catering facilities on Ascension Island for military personnel. Haywood 29 mei Unfortunately, despite many announcements, they are unable to do so decisively, and for good reason.
World War II Memorial on Washington's central Mall, a flashpoint for anger over the forced closure of national monuments and parks, opened early on Thursday, as a park employee in hip boots waded into the fountain to clean it. Firstly I want to thank you for your invaluable supportbut also to give you this re-assurance: My turkey is completelysafe to eat. I voted for that. It will not be called Obamacare. They created a simulator to demonstrate multithreaded, massively parallel, and highly scalable software running on a network of brain-like cores known as Synapse processors.
Obama has the legal rightto waive most of them for days, and then another days,as an option if nuclear negotiations with Iran, which begin onThursday, are going well. Once general practice starts to crumble, the entire NHS will follow with disastrous consequences for our patients. Cooler 29 mei If Alibaba appoints sponsors soon after the new regulations kick in, the earliest they can launch the offer is February Um no, if that were the case that girl would've been bid in half!
Man I bet that hurt, River otters do have nasty teeth, I watched them eat fish and know what they look like. Monroe 29 mei Do you need a work permit? Who do you work for? China and Japan are thebiggest foreign holders of Treasuries. That's why Chairman Goodlatte and our members are working through that process now. Nissanreckons around a fifth of the revenue from those cities comesfrom Shandong and neighbouring Hebei.
Keenan 29 mei Will I get paid for overtime? Held out of action during the offseason, Griffin received clearance July 22 to resume practicing with his teammates on a limited basis. However, the protesters still believe a successful appeal to the supreme court could stop HS2 or delay it for years. Venezuelan authorities have tested other mechanisms for exchange, offering dollars at a slightly lower rate than the official one, but those have failed to satiate the thirst here for dollars.
Shane 29 mei From legendary boxers and iconic tennis players to golfing greats and fabled Olympians, the Daily News has the photos you want of the once-in-a-lifetime sports moments. Find yours today and relive history. Australia came out ahead, but the game overall was the loser, for cricket's continuing officiation crisis overshadowed a stoic, battling hundred from Michael Clarke. I turned and he just slobbered down my chin. He has reached 11 successive semi-finals, while tomorrow will be his seventh appearance in the last nine Grand Slam finals, of which he has won four.
Since winning the Australian Open, the only Grand Slam finals he has failed to reach were at the French Open and at Wimbledon last year. Donnell 29 mei How would you like the money? Activists reported similar examples elsewhere in regions south of Cairo, but not enough to provide effective protection of churches and monasteries.
She said it "shows that Washington is not interested in helping families improve but instead is determined to file disruptive lawsuits with the goal of taking over control and operation of Florida's Medicaid and disability programs. Irwin 29 mei A better bet is to eat them cooked but not deep-fried.
However, it is important that we reinforce successwhen possible, so I have decided to continue the 9 percent rateof VAT for these vital sectors. Garth 29 mei The two least-driven cars, a Bel Air and a Corvair Monza, each have one mile on their odometer. The oldest vehicle with fewer than 20 miles dates to ; the newest is a Monza with nine miles.
They want to enter by force and tear everything apart. But take his words with many grains of salt. He'd be out of a job if he suddenly felt that certain types of bonds were no longer a good bet and that investors should flock to stocks, gold, real estate or any other asset instead. Fredrick 29 mei Kepler-7b is something of an oddity - bigger than Jupiter, but lower in mass - with a density about the same as polystyrene. He took over the big club for the season. The highlight of his tenure was of course the World Series title. Johnson, who was fired after a start in , remains the winningest manager in franchise history.
He was inducted into the Mets Hall of Fame in CoreLogic report:. Johnnie 29 mei Regulators havesubstantially increased capital requirements and forced majorbanks to significantly reduce risk. Barney 29 mei That would address vulnerabilities. It would also address the number of system administrators we have, not fast enough, but we plan to reduce the number of system administrators by 90 percent to make networks more defensible and secure. Clark 29 mei Making that change gradually might be able to reduce some of that, and you may be able to use some of your free time to do some experimenting to see what you want to do next.
In Britain, he was late for David Cameron in Downing Street and had no manners to wait for all the G8 leaders to be served at dinner before starting to eat. In Germany, he meets Angela Merkel with huge scary dogs because he knows she fears them. In Moscow, he makes every EU leader that comes to see him wait hours — to feel like a supplicant. Ariana 29 mei How do you spell that? Chris is shooting a pilot right now, so he might not be working on a script, but he claims to be working on a script, and if he does do that and 20th Century Fox wants to make it Gillian Anderson will do it, I will do it, so start your writing campaign now.
Petroleum prices rose 0. Economists polled by Reuters had expected overall import prices to be unchanged last month. Mail matthes iwkoeln. It's peace politics, stupid! Brexit — Was kommt auf die deutschen Unternehmen zu? IW-Analysen — Forschungsberichte Nr. Griechenland: Silberstreif am Horizont?! Italien vor den Parlamentswahlen - Was kommt nach Monti? Weltkrieg um Wohlstand und pathologischer Exportboom?
Neuer Protektionismus? Towards a Free Trade Agreement with Japan?
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Policy Brief for the European Parliament, Debt sustainability analyses for Italy, Spain and Portugal : assessment and recommendations Intereconomics, Bd. It remains to be seen if there is anything further. None of this means some of these things won't be important over the medium term, particularly the infrastructure guarantees. But this flurry of announcements is driven mainly by politics.
Meanwhile, on a day when the EEF came out with a downbeat manufacturing survey, the manufacturing purchasing managers' index actually recorded a reasonable rise, from That still means the sector is contracting, though only marginally. According to Markit, which prepares the data: "The downturn in the UK manufacturing sector showed signs of easing during August, following a severe contraction in the previous month. The decline in output was centred on the investment goods sector.
Output rose solidly at consumer goods producers, while intermediate goods companies saw a marginal return to growth. Adam Posen, who left the MPC on Friday, said in an interview one of his biggest regrets was not persuading the rest of the committee to do more in and So QE is a hot topic. Every time I give a talk, I get questions on it. People are engaged, and sometimes enraged. What the Bank may have thought was a technical exercise has people interested, puzzled and worried.
Others think QE is the kind of policy associated with dodgy dictatorships. When a central bank buys the debt of its own government, is it time to stock up on gold bars or move to Switzerland? Most of these questions are quite easily answered. The Bank prefer to call QE asset purchases.
It does not buy index-linked gilts. The clue to why that money could not just have been handed out is in the name, asset purchases.
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The new money is used to buy gilts from pension funds, insurance companies and overseas institutions the banks do not hold many. When QE has done its work, the assets will be sold back. Unless households had assets to hand over, say a share of their property, there could be no equivalent policy for them. It would be a massive, unfunded tax cut.
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The same applies, with a little qualification, to the arguments about infrastructure, housing or small businesses. It would have been possible for the Bank to buy infrastructure bonds, bundles of new mortgages or packaged small business loans, directing money to parts of the economy where it is needed. But the Bank is a conservative institution, and chose the least risky assets.
Buying gilts may be low risk, but is it dodgy? It is, however, a figleaf. Many private holders of gilts are very short-term owners. There is no doubt funding a record budget deficit has been made infinitely easier by QE. A new buyer for gilts has come on to the scene when the government needed it. The question is whether the policy has been as successful as the Bank claims. In its most recent research, last month, the Bank looked at the effects of QE on different groups, largely to deflect criticism that it has hurt pensioners.
It identified four potential boosts to the economy. Gilt purchases give sellers money to move into other assets, including corporate bonds, equities and property. They boost market liquidity, send a signal that interest rates are likely to remain low for longer the Bank will not raise rates while doing more QE and, it suggests, could boost consumer confidence.
Economic growth would have been lower. Unemployment would have been higher. More companies would have gone out of business. The second round. Is this plausible? Latest official figures suggest the economy is only 2. Without it, it seems, the economy would have shrunk. Tied to the fact that on current data it has shrunk in the past nine months, and the growth benefits look to be exaggerated.
Every other economy began to recover in the middle of , whether or not they adopted QE. For me the simplest test is to look at what QE is supposed to do: boost the money supply. The Bank would say it is impossible to know what would have happened in the absence of QE. The same applies, however, to claims of its effects on other asset prices. Financial markets are international. Ascribing those rises to QE is pushing it. If scepticism about the growth benefits of QE is in order, is it harmless?
Not necessarily. At some stage the Bank will have to sell the gilts it has acquired, an exit strategy that might not be easy. There is an inflation risk, though not a big one with the money supply so depressed. My argument has been that, though sterling is higher than when the policy first started, regular QE hints or announcements have kept it from rising more, contributing to higher imported inflation than necessary. Disappointingly, we may be seeing a re-run of that now. The biggest problem is that markets are addicted to QE, in the way they used to be addicted to low interest rates before the crisis.
If there is a bond market bubble, the Bank is helping to keep it inflated. We should be sceptical of the claimed benefits of QE. The sooner it ends, the better. There was a further divergence with respect to the desirability of further quantitative easing QE. However, there was widespread agreement that QE would have to be used aggressively if the Bank of England again found itself in a lender of last resort situation, perhaps as a result of events in the Eurozone.
In addition, there was a consensus on the SMPC that the UK economy was broadly flat lining, but that the official growth figures were so dubious that it was impossible to be more precise. Several SMPC members noted the contrast between the weak output figures and the stronger picture painted by the labour market statistics. Without these, any further monetary stimulus would be dissipated in higher inflation. Bias: To hold for the time being. More reliable aids to understanding current conditions are business surveys and labour market data. These suggest that, for most of , the British economy has been growing and indeed growing at least in line with a miserably low trend figure.
Some slowdown seems to have taken place in the last month or two, in the backwash from the Eurozone crisis. However, this deceleration may prove transient. The international background ought, on the whole, to be improving. Monetary policy is being eased in China, while money growth appears to be reviving in the USA. It is possible that it will be appropriate to favour a rise in interest rates at some point in These trends largely reflect declining risk premia rather than a re-assessment of global growth prospects.
Although August is generally a quiet month in bank funding markets, there have been signs of improvement of late. Evidence from foreign exchange swap markets suggests access to short-term dollar funding markets has also improved of late. Whether this hardening of financial market sentiment can be sustained through the autumn is debatable. It is clear we will get some kind of ECB-led bond-buying programme; but to be successful in reversing the self-fulfilling loss of market confidence in Spain, Italy etc.
It is even suggested that the ECB will confine itself to the treasury bills of those countries affected. Targeting the spread over bunds at the short-end of the curve is only one of many mooted options. In short, the plan is not shaping up to be either unconditional or unlimited. There is room for market disappointment when the plan is formally revealed. Markets may also be buffeted by political gyrations this month. The German constitutional court will decide on the legality of the ESM. While it is highly unlikely to be struck down, there are concerns about the constraints the court may place on the Bundestag in providing future financial support to troubled Eurozone economies.
On the same day as the ruling, Dutch voters go to the polls. On the basis of recent polling, there is scope for a major upset, with the main pro-euro parties in danger of losing their effective majority in parliament. There is also the continuing debacle in Greece. The next tranche of official financial aid is not yet assured. Antonis Samaras, the new Greek prime minister, has gone to Berlin and Paris with his begging bowl, hoping to be rewarded with additional time in which to meet the deficit reduction targets.
He will no doubt receive some superficial hand-outs from the Germans; but it is clear that there will be no meaningful change in the fiscal adjustment expected in Greece. It is an added dimension of uncertainty in a highly uncertain environment. A credible bond-buying programme could alter the balance of risks to inflation in the medium-term.
There is an argument in holding fire until we have more information from the ECB.
There is also considerable uncertainty surrounding the magnitude of the monetary stimulus that the FLS will provide. At its least effective, the scheme will simply provide a large funding subsidy for lenders, which they will use to boost profits and capital. This should lower the cost of funding that banks have to pay in the markets, making them more likely to lend over the longer-term. While it should reduce the effective cost of credit to existing borrowers, it may also alleviate some of the quantity rationing that banks are currently imposing.
Relative to the counterfactual, the expansion of private credit and broad money could be substantial. There is a good case for waiting to see how banks respond to the FLS in the weeks ahead, even though any conclusions will be tentative. The likelihood is that additional monetary stimulus will be warranted later in the year, however. Notwithstanding the difficulties in looking through the highly volatile GDP data, the economy appears close to stagnation. Business surveys suggest output was expanding very slowly in the first half of this year.
Recent reports suggest the pace of growth has moderated, and in the case of manufacturing they show an outright drop in activity. After four months of falling new orders, the July Purchasing Managers Index PMI survey pointed to the biggest fall in industrial production since March Meanwhile, service sector activity also appears to have faltered, leading to a decline in investment and hiring intentions since the spring. The recent upward lurch in global energy and food prices suggests the central path for inflation may be somewhat higher in coming quarters than was likely a couple of months ago.
Nevertheless, and to the extent that these moves primarily reflect temporary supply shocks, they are unlikely to have much information regarding medium-term inflation. If anything, global, particularly emerging world, growth forecasts have continued to fall in recent months. Domestic price pressures remain fairly limited despite what appear to be extensive effective supply failures.
In this line of thinking, the output gap is currently relatively small. Doing too little now may contribute to a permanent fall in the sustainable level of UK activity. Bias: No additional QE but Bank should be on standby with other monetary tools. It is currently failing at both. Most economists accept that they have adopted a de facto Nominal Gross Domestic Product NGDP target of sorts, but its failure to confront this issue is dramatically undermining its credibility. Although there are reasons to suggest that CPI remains above target because of temporary or external factors, the inflation target should reflect them all.
However, we have overshot the target for over two years by now, and inflation is creeping up once more, from 2. If the Bank intends to retain the inflation-targeting regime, they need to signal that inflation remains a priority. If they are willing to tolerate above target inflation to temporarily hold up NGDP, they should communicate this.
Low yields increase pension deficits and this has the potential to divert corporate money from much needed business expansion to cover the shortfall. In addition, it is no bad thing to permit moderate wealth transfers from people with tracker mortgages to those with tracker savings accounts. As more time passes since the crisis, it becomes clearer that it is supply side factors hindering the recovery rather than inadequate aggregate demand.
Fiscal and monetary policies have both been accommodating, but stimulating aggregate demand cannot capture lost output if the long-term growth rate has changed in the meantime. Even so, this does not necessarily mean that the output gap is widening. Doing so will increasingly deliver inflation rather than output growth. The Bank of England should concentrate on minimising the distortions caused by ultra-low interest rates, and recognise the limits of what they can do.
Although future events may make emergency liquidity provisions necessary, that should not prevent attempts to return interest rates to their natural rate now. Nevertheless, there has been much speculation that the ONS is underestimating GDP, even after this upward revision, because of the seeming buoyancy of the labour market figures. However, a fairly quick inspection of the employment data suggests that not all is positive. In the second quarter, the number of full-time employees was down compared with a year earlier whilst part-time employees and the self-employed, who may or may not be fully occupied, increased.
In addition, the number of part-time employees who worked part-time because they could not get full-time jobs has increased. Furthermore, a recent survey from the Chartered Institute of Personnel and Development CIPD suggested that one in three firms were holding onto more labour than they needed in order to retain skills but that, ominously, there would be redundancies if the economy did not pick up.
They suggested that manufacturing was indeed declining whilst there was very little growth in services and construction. Under these circumstances the Bank of England looks set to maintain its very accommodative monetary policy for months, if not years, to come. However, they are unlikely to make any further moves before November for at least two reasons. The Bank seems, albeit cautiously, to have high hopes for the FLS. Suffice it to say that the Eurozone crisis rumbles on. Overall, I continue to support very accommodative monetary policy.
However, the time to consider a further tranche of QE is November at the earliest. Inflation has long since ceased to be an important determinant of monetary policy. However, and if it were, the outlook would recommend a rise in rates. In truth, though, inflation is now almost irrelevant.
The key factor is growth. The UK double dip recession goes on. The Eurozone crisis continues its wayward and extended course. Either Greece or Finland may leave as soon as October. A Greek departure could herald a turning point, with a rapid transition to a Single European State, ongoing year-on-year fiscal transfers, and the eschewing of debt pooling. A Finnish departure could herald a wider breakup from the wealthier members and the disastrous consequences that would entail. It is no surprise that UK corporates are not investing their cash in such an environment.
Monetary policy cannot help here, any more. All that macroeconomic policymakers can usefully do is to return policy settings to neutral and thereby facilitate the maximum medium term growth rate. We must not forget that medium term growth is not maximised with interest rates of zero. Only six years ago, anyone proposing that this would be how to maximise growth would have been laughed out of office. The truth has not changed; only the willingness of policymakers to hear it. It is supply-side policy that can make the difference here. Government consumption spending should be cut.
The efficiency of government spending i. There should be reforms to areas such as planning regulation. Beyond that, all that macroeconomic policy can do is not to impede. Government debt should not be excessive. Interest rates should be raised back towards the natural rate. Yet, there is no real controversy here. The truth is that worthwhile infrastructure projects with a good long-term return are always welcome.
The trouble is that such infrastructure spending would probably be going on anyway under existing plans. The main difficulty with infrastructure spending at present is that the coalition cannot agree on what is necessary. The economy itself is growing weakly and the GDP figures are likely to be revised up to reflect this. This weak growth comes three years after the end of the recession proper and it is astonishing that people are still calling for continuously loose monetary policy.
Macroeconomic theory and the models we have that fit the facts suggest that monetary policy moves lose their effects on output once they are well-anticipated and of long standing. Instead, if they affect anything, they affect prices. Banks are unwilling to make extra loans except to non-risky borrowers i. When it comes to small- and medium-sized enterprises SMEs the new capital regulations force large costs on banks if they lend. However, while QE has not affected bank lending and therefore has failed to increase the money supply, and by implication has not reduced the cost of credit, it has succeeded in reducing the returns to savers.
This has happened two ways. This distortion of the savings market is further encouraged by the very low Bank Rate. Thus, this is the rate at which the massive QE is available to the banks as a funding source. Yet, the banks will not lend it to extra i. Hence what this QE and low Bank Rate do is to depress what they offer to savers, and build up bank profit margins on existing business.
So we now have a monetary policy that is not boosting output via increased lending and lower lending rates, but is depressing returns to savers, and with it the cost of funds to the government. Here the repression is occurring through the new controls on banking, combined with the massive printing of government-backed money. Unfortunately, the only way to reverse the malign effects of the new bank regulations is to reverse the regulations themselves.
Furthermore, to force the banks to compete and not to continue as an effective cartel, with only a few players, the government should force the break-up of RBS and Lloyds into several competing units; it should not hang on to its stakes in their present form and build up their profits for a share sale. It would be better to have less capital return and a growing economy with a healthy credit supply. Alas, in the present political climate both in and outside the coalition, these actions are not likely. So the economy is stuck with a distorted savings market; a controlled credit supply, and an impotent monetary policy.
My recommendations for monetary policy are, first, for bank regulations to be greatly eased and for the banks to be broken up. However, and second, whether this is done or not as seems more likely , interest rates should be raised and QE reversed to remove the distortion from the savings market. We are also promised an ONS conference on the subject this autumn. A long-shot suggestion is that there might be glitches in the new software introduced when the ONS switched from its ancient Heath-Robinson methods of calculating the national accounts to its new fully automated system last year.
The possibility of a programming error would certainly be consistent with the unfortunate recent experiences of financial institutions such as Knight Capital Group and the Royal Bank of Scotland. Meanwhile, the uptick in CPI inflation from 2. Recent trade figures, and the most recent public sector finances release also suggest that the two key financial balances of the current account balance of payments and the budget deficit are deteriorating, rather than improving.
The national growth rate was held back by the English house prices increased by 2. The double whammy of the Royal Jubilee and the Olympics has complicated the interpretation of some recent figures.
However, the Jubilee-affected manufacturing output figures in June, which were down 2. The Bank of England has estimated that the Jubilee shaved some 0. Some of this undershooting is likely to be clawed back in the third quarter: Bank officials have also suggested that any Olympics effects in the third quarter are likely to be small. The Munich based CES Ifo world economic climate indicator, published on 16th August, fell in the third quarter, after two successive increases.
The decline was due to both unfavourable assessments of the current economic situation and a less positive six-month economic outlook. In Asia, confidence was held back by the poor current situation, but there was also some optimism that matters would improve over the next six months. This development has partly resulted from the increasingly effective sanctions on Iran, but there have also been output losses in South Sudan, Syria and Yemen while North Sea production has been cut by heavy maintenance schedules and a strike in Norway. This has offset a marked increase in Saudi Arabian production and strong production growth in the US and Canada.
The increased oil price should, correspondingly, be regarded as a genuine supply shock, rather than a wider indicator of global economic activity. Nevertheless, dearer energy costs will act as a drag on global recovery, regardless of their cause. For at least three decades time series statisticians have been using statistical techniques in an attempt to distinguish between demand-side shocks, and supply-side ones.
Furthermore, it is perverse to treat the current difficulties as a failure of capitalism when one of the most obvious features of the 21st century has been the huge increase in the socialisation ratios of most of the worst-hit leading economies, and the noticeably better performance of countries such as Germany, Canada, Australia and Switzerland where this did not happen. There is long-standing evidence that increases in the government spending ratio induce a slowdown in the rate of increase in GDP per capita.
Once the current tranche is completed, additional QE should be kept on standby in case there is a renewed threat of a banking meltdown caused by events in Continental Europe. However, QE should be reserved for lender of last resort purposes and not employed as an instrument of day to day monetary policy. It also seems rather strange, from a political-economy perspective, that Bank of England officials are just about the last group in the country to still enjoy retail price index linked pensions.
It is becoming increasingly obvious that the Bank of England has lost control of UK retail borrowing costs. Admittedly, the quoted monthly rates have bounced around, but the average for is 1. On the other side of the balance sheet, Santander UK has recently announced a 50 basis point increase in its standard variable mortgage rate, to 4. Clearly, the level of Bank Rate has played no role in the evolution of market rates for the past three years.
As and when the UK economic news flow permits, Bank Rate should be raised in order to reconnect it to the structure of market rates. However, with UK activity indicators currently erratic and weak, now is not a good time to do this. It is important not to lose sight of the beneficial purpose of raising Bank Rate, at least to approximate a zero real rate, and preferably a modestly positive one. The UK is subject to mounting inflationary risks. Some of these risks are visible and obvious; others are as yet latent.
Unconventional monetary policy is associated with a much wider range of inflation outcomes than conventional monetary policy because unconventional interventions tend to be poorly calibrated. Regardless of how soon this nightmare scenario arrives, there is plenty of inflationary concern that is already visible. Over the past five years, the UK has demonstrated a greater vulnerability to global inflation than other large European countries. Retail price inflation averaged 5. Inflation exceeded the year-ahead forecasts made by the Bank of England for the third year in succession.
Factors influencing the pass-through of foreign pricing to domestic pricing include the lack of indigenous competition to imports; an oligopolistic distribution system, especially in food retailing and domestic electricity and gas provision; and a dramatic upward revision to clothing and footwear price inflation. The flexibility of Sterling to depreciate means that global pricing pressures have the potential for magnification, given that the UK is an effective price-taker in many sectors.
The sluggishness of the UK economic recovery has reopened the debate regarding the potential medium-term growth rate. The shocking manner in which the economic recovery has petered out since the summer of underlines the centrality of the role of credit, in its broadest sense, in healthy economic development. To the extent that cheap credit fostered the creation of excess capacity in the distributive and financial services sectors, for example, not only was their growth rate unsustainable but their peak level of activity was also artificial.
Post-slump, the viable economic size of these industries may remain below their prior peaks for an indefinite period. This may already be reflected in stagnant productivity and rising unit labour cost inflation. In these circumstances, economic stimulus whether monetary or fiscal, is liable to deliver an adverse mix of inflation and real activity. The view of the Bank of England, reflected in the economic consensus e. However, this has been the official view consistently and incorrectly for the past three years or so, regardless of the external realities.
As ex-MPC member Andrew Sentance has pointed out, global inflationary pressures have strengthened since and and the UK is susceptible to them. Global goods deflation has been replaced by moderate inflation. The improvement in the non-food and energy inflation rate in and has been associated with a particularly weak sequence of economic outturns. Supposing that there is some recovery reflex, aided by the various policy stimulus initiatives, the Bank of England cannot rely on a stagnant economy to deliver its inflation objective, any more than it can rely on a sequence of good harvests to deliver low food price inflation.
For some years now, domestically generated private sector inflation has departed from its stable low trend during to , and there is evidence of a return to an inflationary mentality, reflected in term inflation expectations of the general public. It has not and it now cannot. Bias: To ease further via QE, with wider range of collateral. It always seemed likely that the much-publicised very weak provisional GDP figures for the second quarter, which were published on 25th July and registered a fall of 0. The figures published subsequently, for retail sales but especially for employment, suggested that an upward revision was inevitable.
In the event, the revised data published on 24th August showed a revision to a decline of 0. One of the most puzzling aspects of the performance of the UK economy in recent years has been the dichotomy between output and employment growth. While the level of UK output has reportedly contracted by around 4. The divergence between output and employment has been particularly stark in recent quarters: while the level of GDP has contracted by a cumulative 1. Although less pronounced, there is a similar divergence between the level of GDP and hours worked.
We estimate that, using employment trends alone, the underlying economy expanded by 0. Our survey data, from the monthly Lloyds Bank Economic Bulletin, also suggests that there is still underlying growth in the economy, albeit low. Trade data are implying that the rebalancing that had shown promising signs might be faltering. Despite distortions, the Bank of England is right in my view to have eased policy via QE and other credit easing measures.
Given continuing market volatility it is likely to remain vigilant, mindful of headwinds from Europe. The present note summarises the results of the latest monthly poll, conducted by the SMPC in conjunction with the Sunday Times newspaper. Lending is the key to putting the fiscal strategy on track.
A rather different GDP picture.