The British Economy: A Crisis of Anglo-Liberal Capitalism?

Capital & Class, 1980

Oxonomics, 2009

This paper traces the course of the international financial crisis from its outbreak in mid 2007 to the easing of financial turmoil in May 2009, based on the British experience. The crisis resulted from excessive risk-taking following a prolonged period of macroeconomic stability, combined with financial innovation. Problems arose initially with rising defaults in the US market for subprime mortgages, which induced a breakdown in the market for asset backed securities in mid-2007. The drying up of the money market threatened the liquidity of several UK banks, notably Northern Rock, while falling asset prices undermined their solvency. A critical point was reached when Lehman Brothers failed in September 2008. This event confirmed that the world faced a systemic financial crisis. Fortunately monetary and fiscal authorities took vigorous action to stem the crisis and as a result some confidence has been restored in ailing banks. This has not prevented a sharp decline in economic activity and a persistent shortage of credit.

2012

presented at the launch of the volume at H.M. Treasury, mimeo, 5 Dec. 2001., 2001

It is a pleasure to be given the opportunity to be part of the launch of this most interesting new book. Rather than attempting the impossible task of summarising or reviewing it, I will concentrate on a few of the issues raised in it that I consider to be of special significance.

2010

• Typically, past financial crises have had a marked impact on the level of potential GDP, with the effects building up gradually over a four-to five-year period. • The overall impact varies from one crisis to another depending, among other things, upon: how the economy was performing pre-crisis; how severely the economy first contracted when the crisis struck; the level of pre-crisis 'imbalances' (such as the current account balance); whether or not the currency also came under severe pressure; and how other countries were faring when the crisis struck. • Judged against these yardsticks, the UK currently looks very poorly placed. Most likely it will therefore suffer a further, and marked, deterioration in its productive capacity, and one that leaves the total decline in potential GDP greater than the 5% that the Treasury has assumed when making its projections. Our central estimate is for a 7½% fall; under a more pessimistic scenario, it could be 10%. • More worryingly still, the growth rate of potential GDP will probably also be significantly reduced. Rather than the 2¾% per annum that the Pre-Budget Report suggests as a central estimate, it is more likely that potential GDP growth will run at something close to 1¾% per annum. • The labour market is likely to be severely affected too, with the non-accelerating wage rate of unemployment (or 'natural' rate of unemployment) set to rise markedly-perhaps by 3 percentage points, to around the 9% mark at end-2015. • The precise impact will depend upon how fast fiscal policy is tightened, and the policies used to achieve this tightening. A government that tightens fiscal policy aggressively, and relies more upon spending cuts than tax hikes to do so, is likely to experience a lower rise in the NAWRU, other things being equal. • All in all, it would now appear that the output gap is rather smaller than many analysts imagine (at less than 4% of potential national income)-and that the structural cost of the crisis will therefore be greater than generally envisaged.

JCMS: Journal of Common Market Studies, 2009

The global financial crisis of 2007-08 produced a sudden change in the economic policy of the United Kingdom (UK). Prior to the crisis, the government preached the gospel of price stability, fiscal prudence and light-touch financial regulation. In the wake of the crisis, the government countenanced unconventional monetary policies, a surge in public-sector borrowing and the need for a rethink of financial supervision. This article seeks to understand the significance of these changes using Peter Hall's theory of policy paradigms. Its central argument is that, contrary to appearances, the UK has not yet experienced a fundamental reordering of the instruments, institutions and aims of economic policy. Third-order change cannot be ruled out as the crisis unfolds but the economic ideas underpinning UK economic policy have, for better or worse, demonstrated remarkable resilience thus far. * Thanks to three anonymous referees for helpful comments. The usual disclaimer applies.

Review of Radical Political Economics, 2012

International Review of Applied Economics, 2014

American Journal of Economics and Sociology, 2015