Economics & Finance

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    Lars Rebien Sørensen: It makes no sense for countries to develop vaccines individually

Lars Rebien Sørensen: It makes no sense for countries to develop vaccines individually

Although it can be difficult to predict exactly how the next health crisis will impact us, there are valuable lessons to be learned from the current one. Lessons which should be brought to the table in future political discussions across the world. Because it is clear that politicians and other decision-makers now look at our preparedness and response systems […]

Carbon taxes alone won’t stop climate change

Climate change has shifted from a fringe issue to a worldwide emergency. Our understanding of the phenomena and our willingness to act have developed significantly, in part paralleling the ways in which climate change is being experienced around the globe.

Carbon pricing policy tools (both fiscal taxes and market permits) have been promoted as the core policy tools in mitigating […]

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    How will Covid-19 shape the future economic role of the British state?

How will Covid-19 shape the future economic role of the British state?

When the pandemic has passed into history, what will be its implications for the role of the state in our economy? Some think it will (or should be) the replacement of one -ism with another. But to see the issues we face next through the prisms of an -ism could prove more of a prison than a roadmap. Ours […]

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    When economic informality is high, cash transfers may be the best Covid response

When economic informality is high, cash transfers may be the best Covid response

Crisis management in developing countries is more difficult than in advanced economies. Existing health infrastructure is usually deficient, the large share of the informal economy means a higher cost of the lockdown and subsequent social distancing on businesses, and food production and distribution are more easily disrupted because of border closures, threatening household living standards.

To make matters worse, established […]

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    The future of UK supply chains in a disrupted world: Brexit and Covid-19

The future of UK supply chains in a disrupted world: Brexit and Covid-19

Brexit and Covid-19 are typically considered distinct events. However, these events have one thing in common: they have significantly disrupted the supply chains of UK firms. Since the 1980s, many UK companies have set up centralised manufacturing facilities in low-wage economies where finished goods are assembled cheaply and shipped to higher income markets. Brexit and Covid-19 have delivered a […]

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    Building back better: policies for a strong and sustainable recovery

Building back better: policies for a strong and sustainable recovery

The Covid-19 crisis is already inflicting serious damage on both the UK and the global economy. This raises questions on the appropriate policies for a strong and sustainable recovery, contributing to global efforts to avoid a depression, and delivering on overarching governmental objectives, including reaching net-zero emissions and reducing inequalities across and within regions. On 14 May 2020, the […]

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    Post-pandemic reconstruction: Airbus can serve as an investment model for Europe

Post-pandemic reconstruction: Airbus can serve as an investment model for Europe

If the European Union is truly aiming at reconstruction, it would be better to quarrel less over the various forms of debt (be they the European Stability Mechanism or the Eurobonds) needed to increase liquidity, and instead think about investment plans.

More than half a century ago, Airbus started its business. The initiative came from the French and German governments, […]

Supply chains need to develop immunity to natural disasters

Let me introduce you to a new concept, “supply chain immunity”. Immunity, not resilience. Resilience is often one of the first things to emerge in any debate on how we arrived at the point in which we are today in the Covid-19 pandemic, especially as it applies to supply chain management. Supply chain resilience generally means the ability to […]

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    UK investment fund for high-growth firms is a step in the right direction

UK investment fund for high-growth firms is a step in the right direction

Support packages for innovative firms are emerging as second-wave policy tools during the Covid-19 crisis. Following similar efforts in France and Germany, the UK government unveiled a £1B support package for start-ups, scale-ups, and research and development firms on 20 April, after having launched its main business support programs in March.

The new UK support package includes a novel £250M […]

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    Bank loss provisioning rules: a convenient scapegoat in the Covid-19 crisis?

Bank loss provisioning rules: a convenient scapegoat in the Covid-19 crisis?

As a consequence of the upcoming economic crisis triggered by the Covid-19 situation, US and European banks are expected to book more than $50bn of charges on bad loans in the first quarter of 2020. The accounting rules that dictate the way banks provision for loan losses are crucial because they directly affect the ability of banks to continue […]

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    The simplest way to unlock $4.65 trillion in liquidity for firms

The simplest way to unlock $4.65 trillion in liquidity for firms

Governments around the world are wondering how to expediently put money in the hands of the millions of firms struggling in the health crisis. Look no further: just pay your bills on time. If governments paid all receipts due to their contractors within 45 days, some $4.65 trillion in fresh liquidity would enter the private sector. To put this […]

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    The German court ruling against ECB asset purchases doesn’t make economic sense

The German court ruling against ECB asset purchases doesn’t make economic sense

On 5 May 2020, the German constitutional court ruled that the European Central Bank’s public sector purchase programme (PSPP), the main part of its quantitative easing, is overstepping the ECB’s competencies, in its current form. The effects of this decision on monetary policy will probably be minimal: the court decided that the decisions were not appropriately justified, so that […]

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    The density and connectedness of cities now appear as weaknesses

The density and connectedness of cities now appear as weaknesses

Globalisation, urbanisation and prosperity have been among the most notable trends of the post-war era. The world is becoming more connected, following technological advances which have made communication cheaper, faster and easier, as well as political advances which have created a fairly peaceful and democratic world order with close cooperation across national borders – nowhere more so than in […]

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    Covid and climate – building a strong and sustainable recovery

Covid and climate – building a strong and sustainable recovery

The UK and the world have been transformed by the Covid crisis. Beyond its tragic human costs and loss of life, the pandemic and the necessary lockdowns have resulted in a sharp contraction of aggregate demand, supply disruptions, loss of revenues for many service sector businesses and unprecedented increases in unemployment.

The demand, output and employment impacts are expected to […]

How is Covid-19 affecting businesses in the UK?

The Covid-19 pandemic and lockdown have highlighted the need for real-time data to understand the spread of the disease, identify vulnerable groups and design policies to mitigate the health and economic fallout of the crisis. While several new efforts to collect individual data are being made (Adams et al., 2020), data on businesses is more limited.

A relatively under-utilised source […]

How we count the number of Covid-19 deaths matters

The number of Covid-19 deaths by country is widely used by governments and the media as a vital measure of the pandemic. A typical example is the slide below used for many weeks at the daily UK government briefings.
Figure 1. Global death comparison (UK government’s cabinet office briefing rooms chart)

Notes: Countries are aligned by stage of the outbreak. Day 0 […]

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    Large economic benefits justify small-firm loan guarantees in the Covid-19 crisis

Large economic benefits justify small-firm loan guarantees in the Covid-19 crisis

Loan guarantees are a main policy response during the Covid-19 crisis. These guarantees were also popular during the Great Recession, but their demand from businesses in this crisis is unprecedented. The relatively worse economic conditions undoubtedly explain much of current demand, but also possibly highlight the differences in the guarantees’ design for each crisis. Will the new guarantees be […]

The future of apprenticeships is in the balance

The unprecedented economic upheaval brought by the Covid-19 pandemic raises several concerns for the functioning of the English apprenticeship system, particularly in the medium-term as economic and social activity resumes.

Even in normal times, firms with apprentices may fail: usually disruption is minimised by reallocating apprentices to other firms. But economy-wide downturns exacerbate this problem because of the risk that […]

Nine policy taboos overturned by Covid-19

An economy is defined as a “circular flow of income”. One person’s spending is another person’s income. National income is the sum of everyone’s spending and loosely speaking, growth comes from increased velocity of that spending.

Social distancing or lockdown is a deliberate interruption in that flow of income. A circuit-breaker for the virus is necessarily a circuit-breaker for the […]

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    Covid-19 and the international trade downturn: lessons from 2008

Covid-19 and the international trade downturn: lessons from 2008

The current Covid-19 outbreak is raising a number of growing concerns about the UK economy and its capacity to cope with the current situation and recover in the near future. One particular area of concern, in the UK and elsewhere, is related to international trade, i.e., trade of goods and services across countries. More specifically, the World Trade Organisation […]