Ian Mulheirn

Perfectly adequate? • Resolution Foundation In 2002, the Labour Government established the Pensions Commission to review the UK’s private pensions system and make recommendations for reform. Twenty years on from the Commission’s landmark first ...

Late to this important & nicely nuanced @resfoundation.bsky.social report on the future of the pension settlement 20 years after the Turner report.

Great work by @mollybroome.bsky.social & @ianmulheirn.bsky.social
www.resolutionfoundation.org/publications...

I thought big rise in 5yr/5yr indicated there was more to it than the policy rate path?

Seems like the role of QE is underplayed in explaining the 2008-2020 period. Real rates rose in tandem with nominal rates when inflation took off, which maybe suggests a causal link between the 2?

All academic now but I don’t get this. Seems like he made the right judgement because of squatting/fiscal downgrade/nothing going to turn up/Reform off guard etc. just don’t understand the case for the long game

Agree, but seems like even on a narrow definition there is plenty of ‘traditional’ protectionism in the form of soft loans directed towards manufacturers

‘China’s export boom can hardly be called protectionist’.

Wonder whether @michaelpettis.bsky.social would agree with this description in this weekend’s FT leader

How many net additions do EPCs suggest for England in 2023-24 Neal?

It doesn’t leave you back where you started in terms of the trade deficit - it falls as the tariffs rise

Not sure I follow. As I see it the diagram says ‘when you reduce trade, deficit country net saving rises’

A unilateral tariff moves you further up Home’s savings schedule and retaliation by Foreign pulls you back down a bit. But net effect of trade fragmentation is more saving in deficit country

I think if you’re Home, tariffs tend towards eliminating CA deficit because in the limit there’s no trade. So interest rates rise to ‘r aut’, which has to entail no capital inflow but higher domestic saving

Obvs impact of tariffs is different, tending towards 'r aut'. But both are ways of refusing to absorb Foreign's CA surplus

In the tariff case world econ takes a supply-side hit from market fragmentation. In the savings case there's a demand-side hit - washes up in falling r* and weak (prod) growth

This pic from Obstfeld's recent NBER paper captures what I meant about the impact of savings policy on the current account deficit @curr.bsky.social (also of interest @johnspringford.bsky.social). If shift the savings schedule out in 'home', r drops, CA imbalance disappears

"The UK faces a chronic housing shortage and is far behind on the government target to build 300,000 homes per year"

I'm sure it need fixing, but this housing story would be much less exciting if it mentioned the actual rate of household growth this century (c.150k/yr) and ONS projections of 160k/yr

At roughly 220k/yr, net additions have far exceeded those rates over the past decade

www.ft.com/content/1977...

Sorry to hear this Nancy. You and your team have done some really important work

Why the Tories’ hardline immigration policies won’t win over UK voters Visa changes may cut numbers of students and skilled workers who enjoy public support while Rwanda plan won’t address concerns over small boats

My latest bit for the Observer - why the Tories' hardline immigration policies won't win over British voters

www.theguardian.com/politics/202...

The chancellor's boost to LHA offers only a temporary reprieve on rent affordability.

Here's the summary and report:

www.generationrent.org/2023/12/08/t...

NEW: Generation Rent's new rent forecast is just out on ITV news

We show that rents are likely to rise more than 14% above next April's Local Housing Allowance levels within just 18 months, taking affordability back to current unsustainable levels
 
www.itv.com/news/2023-12...

Really interesting. When you say ‘batteries’ do you mean wholesale storage or people using their EV batteries? Could that provide additional storage? Also, does demand management feature as a major contributor to the solution or marginal?

This is very good

There's big politics here. If the OBR were to downgrade potential output growth by 0.1% from the current 1.6% that would take about £10bn off the chancellor's fiscal headroom.

If they were to split the difference with the Bank's view of 0.7-0.8%, the Budget would be *very* difficult

But even if the Bank eventually corrects and there’s no hysteresis, the short term effect is more debt and a tougher couple of years than necessary for households. Which in context of fiscal over-optimism isn’t great!

Certainly true abt the correlation with global growth. But can still underperform others if you have consistently deflationary policy and/or if there’s hysteresis causing future growth to start from a lower level than it could

V good. If the OBR decide they were too optimistic in time for the March budget then Sunak and Hunt will have a real (self-imposed) problem.

Thanks Sam

Last week's tax cuts certainly can. If the OBR agreed with the Bank headroom would have been deeply negative

There's big politics here. If the OBR were to downgrade potential output growth by 0.1% from the current 1.6% that would take about £10bn off the chancellor's fiscal headroom.

If they were to split the difference with the Bank's view of 0.7-0.8%, the Budget would be *very* difficult

Lopsided macroeconomic policy A combination of OBR optimism and Bank pessimism on the outlook for the economy is screwing up macroeconomic policy

What happens when one of your official forecasters is systematically optimistic and the other pessimistic about growth? Bad stuff.

My blog argues we have lopsided macroeconomic policy because the Bank and OBR disagree - leading to lower growth and higher debt than we would have if they agreed.

I’m not sure the Bank can have much impact on the gov’s cost of borrowing in the medium term. If market rates are high around the world then they will be here too. So excessively tight MP gets you more debt in short run, potential scarring to growth in medium term, and no real change in debt service

Lopsided macroeconomic policy A combination of OBR optimism and Bank pessimism on the outlook for the economy is screwing up macroeconomic policy

This is a very good piece by @ianmulheirn.bsky.social - on how the very different Bank (pessimistic) and OBR (optimistic) forecasts of economic growth are a problem.

Quick thread…
medium.com/@ian.mulheir...

Did you see the latest rent data? On dwelling stock, London is not an outlier from rest of England- stock grew faster than households