City AM quotes Ben Southwood on CPI fall

The Adam Smith Institute's Head of Policy, Ben Southwood, was quoted by City AM on the CPI drop.

Read the article here.

“After years of above-target annual CPI rises, then coupled with lacklustre growth or even retrenchment, below-target inflation at the same time as substantive recovery is highly encouraging,” said Ben Southwood of the Adam Smith Institute."

Sam Bowman quoted in City AM

Research Director of the Adam Smith Institute, Sam Bowman, was quoted in a City AM article regarding sky-rocketing housing prices in London, England.

Read the article here.

"This planning system is "the biggest cause of these runaway prices rises", says Bowman, and the solution is to cut it back.

"Unless the government liberalises planning radically to allow a huge amount of new house construction, house prices are likely to stay high for the foreseeable future," he says. As long as permits stay at rock bottom lows, then we can get used to prices that stop new buyers from getting on the property ladder."

Press Release: Housing market out of control; planning system to blame

Commenting on sky-rocketing house prices in London, Research Director of the Adam Smith Institute, Sam Bowman, said:  "London’s house prices are out of control, and the planning system is to blame. The ONS’s headline data, which shows that house prices rose across the UK by 9.1% in the year to February, is extreme enough, but drilling down into the data reveals that prices rose in London by an eye-watering 17.7%.

"This is a disaster – the housing market is out of control, particularly in London, making housing increasingly unaffordable for many people, particularly the poor and young. Rising house prices are nice if you own your own home and are planning on downsizing or want to leave your house to your children, but if you want to get onto the property ladder or move to a larger home, say, to start a family, the price rises revealed by today’s news are devastating. Rents are rising more slowly than house prices but it seems likely that eventually they will catch up, particularly for short-term leases.

"Help to Buy is likely to be one factor in these price rises, because the scheme inflates demand by subsidizing home buying. [1] And if house prices fall, the taxpayer will take the hit. But the biggest cause of these runaway train price rises is the planning system, which makes it inordinately difficult for new construction to take place to allow supply to meet demand. Since 2008, issuance of construction permits for residential buildings has been at a fifty-year low [2].

"Unless the government liberalises planning radically to allow a huge amount of new house construction, house prices are likely to stay high for the foreseeable future

[1] http://www.adamsmith.org/wp-content/uploads/ASIburningdownthehouseWEB.pdf

[2] http://research.stlouisfed.org/fred2/series/ODCNPI03GBA661N

For further comment or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Press Release: Fall in annual CPI inflation to 1.6%

Ben Southwood, ASI Head of Policy, commenting on the fall in annual CPI inflation to 1.6%, said:

"After years of above-target annual consumer price index (CPI) rises, then coupled with lacklustre growth or even retrenchment, below-target inflation at the same time as substantive recovery is highly encouraging.

"Disinflation is a worry in a time of weakness, but should be desired and expected in a time of strength—many economists believe the failure to account for the "good deflation" generated by productivity improvements from inward migration and developing world growth in the early 2000s set the scene for the 2007-8 crash.[1]

"Since this fall is accompanied by robust real GDP recovery, and appears to be mainly driven by cheaper fuels, we needn't be too worried that the Bank of England has decided to go the way of the European Central Bank and let nominal aggregates fall well below the appropriate and previously expected growth rates.

"But the difficulty of working out whether or not this inflation is in fact supply- or demand-side, and thus whether or not the Bank should respond by easing or doing nothing, is yet another indication that we should look to an alternative policy regime. Targeting nominal income would automatically let inflation fall when RGDP growth is strong and automatically let inflation rise when RGDP growth is weak—both the ideal appropriate policies.[2]

"The Treasury and the Bank should seriously consider this alternative—to take uncertainty out of the system and avoid a repeat of 2008."

[1] http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2008/11/cj28n3-1.pdf

[2] http://mercatus.org/sites/default/files/Sumner_NGDPTargeting_v2.pdf

For further comment or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Eamonn Butler Writes for The Sunday Times

Director of the Adam Smith Institute, Dr Eamonn Butler, wrote an op-ed for The Sunday Times entitled: "Britain's fake growth totters along with the zombies."

Excerpt:

"Will the big, profligate governments of the G20 ever take a lesson from their more prudent partners, and sort out their banks, balance their books and trim their spending? Probably not. They still imagine that they can create real growth by slashing interest rates, printing money and borrowing whatever they need. But that is what caused our problems. If the world's big economies do not face up to reality, world economic growth is going precisely nowhere."

Press Release: Bank of England's decision to hold policy was the right choice

Commenting on the Bank of England's decision to hold policy, the Adam Smith Institute's Head of Policy Ben Southwood said:

"The MPC has made the right choice.

"The path of aggregate demand—as measured by nominal GDP growth—is just about where we'd want it, given the Bank's apparent decision to start a new trend rather than catching up with the one we saw prior to the recession.

"In general, and historically, we'd want to catch up to pre-recession trends, but by now most of the costs of failing to do so have probably been borne.

"It would certainly be inappropriate to tighten policy now—the recovery is only just setting in and there is considerable slack in the labour market, with nominal wages growing just 1.4% annually according to the latest data."

For further comment or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Ben Southwood is Featured in City AM

The Adam Smith Institute's Head of Policy, Ben Southwood, was quoted in a City AM article, arguing that the Bank of England made "the right choice" to hold policy.

Read the article here.

"Ben Southwood, head of policy at the Adam Smith Institute, says that it's "the right choice" as the path of aggregate demand - measured by nominal GDP growth - as the current trend is "just about where we'd want it".

It would "certainly be inappropriate to tighten policy now", says Southwood, as nominal wages growing at just 1.4 per cent annually suggests there is still considerable slack in the labour market."

Press Release: Labour's immigration policy is conservatism in progressive clothing

Commenting on the Shadow Home Secretary's policy announcements regarding UK immigration and migrant workers, Research Director of the Adam Smith Institute, Sam Bowman, said: 

“Yvette Cooper is almost entirely wrong on the economics of immigration and her policy announcements today amount to a nearly wholesale adoption of the Conservative Party’s worst policy.

“Cooper’s position on low-skilled wages is baseless. According to the impact assessment published by the Home Office last month, if low-skilled immigration has any impact on low-skilled native wages at all, it is a minor and short-lived one. Immigration also seems to raise average native wages and have a positive impact on economic growth, neither of which Cooper mentions.

“It is baffling that Cooper can claim that immigrants are a burden on public services. As repeated studies have shown, immigrants pay more in tax than they cost in services – a phenomenon which over the next few decades can mean the difference between a national debt of over 180% of GDP and less than 60%. It’s possible that a huge liberalization of low-skilled immigration could change that, in which case reforms like charging immigrants a fee to reside in the UK or restrict access to public services would be a decent solution. There is no problem with immigration to which strict immigration controls are the best solution.

“Cooper’s announcement that students and refugees would be excluded from the net migration cap if Labour was in government is welcome, but the fact remains that Labour has accepted the facile “logic” of the net migration cap, is making no reforms to high-skilled immigration, and, like the Tories, is basing its immigration policy on anecdote instead of evidence.

For further comment or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Ben Southwood featured in The Sun

The Adam Smith Institute's Head of Policy, Ben Southwood, was featured in The Sun, discussing the unfair planning system:

"THE planning system is to blame, writes Ben Southwood of think tank The Adam Smith Institute.

"It unfairly skews the market in favour of current homeowners, all but shutting out buyers.

"Now we have Help to Buy, which adds to the demand for homes without making any difference to the system that stops companies building them.

"Only 9.95 per cent of the UK is built up and half of that is made up of gardens."

Ben Southwood quoted in City AM

The Adam Smith Institute's Head of Policy, Ben Southwood, was featured in a City AM article on the European Central Bank's interest rates.

Read the article here.

"Ben Southwood, head of policy at the Adam Smith Institute, says that markets aren't buying recent 'open mouth operations', as statements from ECB staff have failed to move the euro against the dollar.

"That 0.5 per cent headline inflation figure masks that many Eurozone members are now suffering from deflation - and not the good kind, that stems from improvements in productivity, says Southwood. Instead, these states now see deflation without real GDP growth. That suggests that demand is too low, and that prices are falling to clear markets.

"ETX Capital's Ishaq Siddiqi says that investors have adopted a "wait-and-see approach" ahead of any potential action by the central bank. Market participants may see rate cuts - even into negative territory - as inadequate, and may want to see a "big bazooka" if deflationary concerns do materialise."