Nick Macpherson

2 thoughts on the spending review. 1. Raising public service productivity is more important than ever. 2. 15 years of prioritising the NHS, education and "triple lock" (and now defence) by cutting all other programmes, in particular the home office and justice) is no longer sustainable. #soundmoney

I dodged that question but I do recall writing an essay later on about the bright prospects for raising productivity growth in the coal industry: not the first or last time I was a tad optimistic about Britain's growth prospects.

Starmer must defy Trump by hugging other tariff victims closer Britain doesn’t deserve to be on the end of Donald Trump’s taxes, but the solution may be to form an economic coalition of the willing and focus on what we’re good at

Sound economic analysis from the ever insightful @dsmitheconomics.bsky.social. #freetrade

www.thetimes.com/article/06e1...

👊🇨🇦🔥

A US tariff pathology is unleashed upon the world [FREE TO READ] The Republicans have allowed a destructive economic nationalist to lead America into chaos

My Trade Secrets response to the tariffs.

Bad news: these tariffs cd be worse than the 1930s & the Republicans are inflicting their deep pathology on the world.

Good news: this is as yet a US trade war, not a world trade war. Others can resist following Trump's crazy road.

First 300 clicks free.

Fiscal rules can be useful. But the Treasury always attaches more importance to them than they deserve. And something which can be broken with impunity on a regular basis isn't a rule. It's a target. Much more important is whether the public finances are sustainable.

The biggest challenge for the Chancellor is delivering the revenue forecast. Despite all the tax increases since Labour last left office, the tax burden only rose by 2.1 per cent of GDP in 15 years. Today's forecast assumes a similar rise in just 5 years. If only raising revenue was that easy...

Debt service costs are set to rise from £105.2bn to £131.6bn over the next 5 years, a growth rate significantly ahead of spending on public services and welfare. a reminder that the Chancellor is right to prioritise fiscal consolidation. #soundmoney

Earnings related unemployment benefit abolished in 1982. Earnings related invalidity benefit and the state earnings related pension scheme lived on until the mid-90s, having been cut back in the Fowler reforms of the mid-80s.

True. Barbara Castle's 1975 reforms exchanged income related contributory benefits for income related NI contributions. It was peak social insurance. Sadly it didn't last. By the mid-1980s it was deemed unaffordable. But income related national insurance lives on at a much higher rate.

I signed on to supplementary benefit in 1978 -aged 18 -having broken my arm. I may be wrong but I'm pretty sure my benefit at a little under £14 a week was more generous in real terms than it is now, despite living standards more than doubling since. It was the year the UK was at its most equal.

I've been wrestling with the same issue for some weeks. I still haven't found the answer. But I suspect washed up and cynical HMT officials (me not you) aren't the target audience.

Good to know Canada is in safe hands. If ever someone was well qualified to deal with the extraordinary challenges Britain's most reliable and loyak ally faces, it's my old friend Dr Carney. #freetrade

Love the way no one over here paid any attention to Australia when a massive Chinese warship started live-firing off its coast, but some random influencer no one’s ever heard of steals a baby wombat and our media can’t get enough 😀😬

Mellon vs Churchill — when world leaders chose co-operation over confrontation Jill Eicher’s timely book brings to life the battle between the US Treasury secretary and the British chancellor in the wake of the first world war

My book review for tomorrow's FT. www.ft.com/content/c741...

Freedom and democracy are always worth fighting for. Slava Ukraini.

We have now had fiscal "rules" for more than 25 years. Arguably they have done more harm than good encouraging HMT to focus on incremental changes to live within them until they can't...cue a new rule. What matters is the substance of fiscal policy. Does it support macro policy? Is it sustainable?

Happy Brexit Day (2).

Why did immigration *increase* after Brexit, and what do w know about the economic and the labour market impacts?

My National Institute Economic Review article (open access).

www.cambridge.org/core/journal...

"It takes many years before governments can have any impact on the trend rate of growth, and most governments end up mistaking cyclical for structural improvements."

UK 10 year bond yields have risen 14 basis points in the last month. Germany's have risen by 30 bp and the USA's by 21 bp, confirming both the fickleness of markets and the media. #soundmoney

An interesting battle is playing out between the Bank of England and the market as to who determines the interest rate mortgage holders and businesses pay. At the moment, the market is winning. #soundmoney

Partnerships with HM Treasury & DBT mean our 'Chancellors & Treasury' & 'History of Civil Service' students had classes in the Old Chancellor's Office & the Old Admiralty Building with DBT perm sec Gareth Davies

ℹ️ www.kcl.ac.uk/study/postgr...

@nickmacpherson.bsky.social @policyatkings.bsky.social

I'm not sure you are right. Chris Wormald was always his own man, always worked in difficult departments which delivered the public services which matter rather than choosing an easy life in "the centre", and his promotion in the civil service was as much despite Lord Heywood as because of him.

Maybe though in the 1950s and 1960s when the top rate of UK inheritance tax was never lower than 75% productivity grew much more rapidly than it has over the last 20 years when the IHT rate has never been higher than 40%.

As some other Members put it, probably correctly: "this is the sound...this is the sound of the suburbs".

I commend John Kingman's article on how to get the economy growing. In short, be bolder on planning, infrastructure, university reform and social housing.

Excellent case studies on the IMF & ERM crises on our 'Chancellors & the Treasury' module

Thanks to practitioner experts Ed Balls, Catherine Macleod, @nickmacpherson.bsky.social, & Mario Pisani

The module is part of MA Government Studies: www.kcl.ac.uk/study/postgr...

@policyatkings.bsky.social

I understand why inheritance tax is unpopular. But 100%IHT relief encourages asset hoarding until death: it encourages inefficiency and is a barrier to productivity growth.

Difficult to disentangle the various drivers. The sheer scale of the prospective supply of US debt has been the main driver of bond prices of late. The key thing for medium sized countries is not to stand too far out from the crowd.

Not altogether surprising given uncertainty around the US election but a reminder that investors in UK gilts expect a return and demand has its limits. #soundmoney