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Pay growth at 11-year high but further acceleration unlikely
Figure 1: Average Weekly Earnings (3 months average year on year growth, per cent)
Source: NIESR, ONS.
Main points
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.6 per cent excluding bonuses
(3.4 per cent including bonuses) in the three months to May compared to the year before (figure 1).
With CPI inflation at 2 per cent in the three months to May, real wages excluding bonuses grew at an annual rate of 1.6 per cent over
the same period, the strongest rate of regular real earnings growth since November 2016 (figure 2).
Our Wage Tracker published last month had suggested that wage growth would continue to pick up modestly in May. This is confirmed by May data outturns which came in slightly stronger
than predicted, partly as a result of upward revisions to April data.
Going forward, the Wage Tracker indicates that regular pay growth will have reached 3.8 per cent in the second quarter of this year. Our first estimate for the third quarter of this
year has regular pay growth stabilising at around 3½ per cent, reflecting survey evidence of a reduction in hiring and fewer vacancies.
Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth of around 3 per cent in the second and third quarter of 2019, up from just above 2 per cent
in the first quarter.
Arno Hantzsche, senior economist at NIESR, said
“Strong earnings growth in the first half of 2019 helped real pay recover most of the losses incurred since the financial crisis a decade ago. However, economic and political uncertainty pose a considerable risk to hiring activity and, according to our new
estimates, prevent a further acceleration of earnings growth in the months ahead.”
Figure 2: Real whole economy AWE (3
months average year on year growth, per cent)
Source: ONS, NIESR.
Notes: Real pay growth is nominal pay growth deflated by a 3-month moving average of the consumer price index (CPI).
Figure 3: Public and Private sector AWE (3
months average year on year growth, per cent)
Source: ONS, NIESR.
Please find the full analysis in attachment.
For more information please telephone NIESR on 020 7222 7665.
Kind Regards,
Luca
LUCA PIERI
COMMUNICATIONS AND EVENTS CO-ORDINATOR
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1931 (direct)
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National Institute of Economic and Social Research’s GDPTracker
Figure
1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·Latest ONS data published this morning indicates that the UK economy contracted by 0.2 per cent in the second quarter of 2019, partly due to less inventory accumulation
than in the first quarter. This outturn was a little weaker than the 0.1 per cent fall in output that we had forecast last month.
·Recent surveys suggest that output was flat in July, with consumer-led service sector expansion being offset by further contractions in manufacturing and construction.
If these trends continue, GDP will grow by around 0.2 per cent in the third quarter (figure 1). That would mean that output is flat throughout the middle of this year.
·Nevertheless, quarterly data is likely to be volatile throughout the year and, with little positive momentum in the economy, there is a significant risk that output
falls again in the third quarter. In that case the economy would be in a recession that began in April.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said
“Economic growth in the United Kingdom was negative in the second quarter of 2019 and is set to remain weak in the third quarter in the face of a global slowdown and continuing Brexit-related uncertainty. Our latest estimate implies that there is a significant
risk that the economy is already in a recession that began in April, and the clear possibility of a more material downturn should there be a no-deal Brexit.”
Please find the full analysis in the document attached
-------------------------------------------------
For more information please telephone NIESR on 020 7222 7665.
Kind Regards,
Paola
PAOLA BUONADONNA
EAD OF COMMUNICATIONS AND ENGAGEMENT
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1923 (direct)
| +44 (0) 7710 484152 (mobile)
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National Institute of Economic and Social Research’s Wage Tracker
Real earnings growth back to pre-Referendum rates but further pick up unlikely in near term
Main points
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.9 per cent excluding bonuses (3.7 per cent including bonuses) in the three months to June
compared to the year before (figure 1).
With CPI inflation at 2 per cent in the second quarter of this year, real wages excluding bonuses grew at an annual rate of 1.9 per cent over the same period, the strongest rate of regular real
earnings growth since May 2016.
June data outturns are in line with forecasts published in our Wage Tracker last month. Strong quarterly data is explained by April pay rises, with weaker quarter 1 data dropping out of the series;
month-on-month earnings growth rates are considerably weaker, in particular in the public sector.
Going forward, the Wage Tracker indicates that regular pay growth will stabilise at around 3½ per cent in the third quarter of this year, reflecting a less tight labour market and survey evidence
of a softening in hiring activity.
Based on NIESR Wage Tracker and weak GDP Tracker information, we estimate unit labour cost growth of nearly 4 per cent in the second of 2019 and above 3 per cent in the third quarter, up from
just above 2 per cent in the first quarter This is likely to put upward pressure on consumer prices in the months ahead.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said “While real earnings growth has now
returned to pre-referendum rates, the labour market appears to be reaching a turning point, with unemployment no longer falling, the number of job vacancies no longer increasing and companies and workers deterred from bigger employment decisions by Brexit
and global uncertainties.”
Please find the full analysis in attachment.
For more information please telephone NIESR on 020 7222 7665.
Kind Regards,
Paola
PAOLA BUONADONNA
HEAD OF COMMUNICATIONS AND ENGAGEMENT
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1923 (direct)
| +44 (0) 7710 484152 (mobile)
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
in England and Wales (charity registration number 306083).
This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
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National Institute of Economic and Social Research’s
GDPTracker
Figure
1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·The UK economy is on course to grow by 0.3 per cent in the third quarter of 2019, a resumption of growth after a 0.2 per cent fall in the second quarter
when production had slackened after being boosted in the first quarter by stockbuilding ahead of the original Brexit departure date (figure 1).
·According to new ONS statistics published this morning, the UK economy was flat in the three months to July. The stagnation in output in the three
months to July was associated with an above-expectations 0.3 per cent increase in GDP in the month of July, driven primarily by an increase in output in the services sector.
·Recent surveys suggest that output was flat in August, with service sector expansion being offset by contractions in manufacturing and construction.
If these trends continue, GDP will grow by around 0.3 per cent in the third quarter (figure 1). This is higher than the 0.2 per cent growth that we had pencilled in last month.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said:
“It looks like there has been a welcome resumption of economic growth in the third quarter, roughly offsetting the fall in the second quarter. But it is not clear how long growth will
continue. Only the services sector is expanding, primarily to meet higher demand from consumers driven by increased household incomes fuelled by rising real wages. But there is a limit to how much further real wages can grow without a pick-up in investment
and productivity, and this seems unlikely in the near term.”
Please find the full analysis in the document attached
-------------------------------------------------
For more information please telephone NIESR on 020 7222 7665.
Kind Regards,
Paola
PAOLA BUONADONNA
EAD OF COMMUNICATIONS AND ENGAGEMENT
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1923 (direct)
| +44 (0) 7710 484152 (mobile)
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
in England and Wales (charity registration number 306083).
This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
this email in error.
We have taken reasonable precautions to ensure this communication does not contain viruses. We cannot accept liability for any damage
your system sustains due to software viruses. You should carry out your own information security and virus checks before opening any attachments or following any links. The contents of this email may be intercepted, monitored and/or recorded by a third party.
We exclude any liability arising from any interception.
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National Institute of Economic and Social Research’s Wage Tracker
Strong earnings data driven by July bonuses and public sector pay but further pick-up unlikely
Figure 1 – Average weekly earnings growth (per cent per annum)
Main points
• According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.8 per cent excluding bonuses (4 per cent including bonuses) in the three months
to July compared to the year before (figure 1).
• With CPI inflation at 2 per cent in the three months to July, real wages excluding bonuses grew at an annual rate of 1.8 per cent over the same period (2 per cent including bonuses).
• July total earnings data was slightly stronger than we forecast last month due to above-expectation bonus payments, more robust public sector earnings, and back data revisions while
data on private sector regular earnings turned out as forecast.
• Going forward, the Wage Tracker indicates that regular pay growth will stabilise at just below 4 per cent in the third quarter of this year, reflecting survey evidence of a softening
in hiring activity.
• Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth of around 3½ per cent in the third quarter as economic activity remains lacklustre. There
is a risk that firms pass higher production costs on to consumers which could add to inflationary pressures in the economy.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said “Today’s labour market data were again strong but more timely signals show that a turning point may
soon be reached as Brexit and global uncertainties increasingly weigh on hiring. Whole-economy earnings growth has become more reliant on services sectors whose output continues to be in strong demand and on hiring and pay decisions in the public sector.”
Please find the full analysis in attachment.
For more information please telephone NIESR on 020 7222 7665.
Kind Regards,
Paola
PAOLA BUONADONNA
HEAD OF COMMUNICATIONS AND ENGAGEMENT
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1923 (direct)
| +44 (0) 7710 484152 (mobile)
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
in England and Wales (charity registration number 306083).
This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
this email in error.
We have taken reasonable precautions to ensure this communication does not contain viruses. We cannot accept liability for any damage
your system sustains due to software viruses. You should carry out your own information security and virus checks before opening any attachments or following any links. The contents of this email may be intercepted, monitored and/or recorded by a third party.
We exclude any liability arising from any interception.
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NIESR October 2019 Newsletter
View this email in your browser
National Institute of Economic and Social Research
Newsletter - October 2019
Welcome to NIESR’s newsletter, a quarterly catch-up with the main publications, events and media stories the Institute has been involved with and a look ahead to what we are planning for the next quarter.
The Festival of Social Sciences at NIESR
The ESRC Festival of Social Science 2019 will run from 2-9 November 2019, with over 470 events being held across the UK, providing an opportunity for the public to meet some of the country’s leading social scientists to discover, discuss and debate how research affects their lives.
This year, NIESR is delighted to be taking part by putting on its largest series of events yet: ‘The Festival of Social Science at NIESR', running from 4 to 9 November. Here are some highlights:
4 November - Inaugural Prais Lecture on Productivity: How not to miss the productivity revival once again with Bart Van Ark (Chief Economist at The Conference Board, New York).
6 November - Inaugural Dow Lecture: Do economists expect too much from expectations? with Martin Weale.
7 November - Is it a bad idea to be a football fan? with Peter Dolton.
Our full list of events and RSVP details can be found here.
Economic Review No.249 - "Economic Measurement"
Our quarterly Review, published on the 24th of July, focused on economic measurement and emerged from research presented at the ESCoE 2019 Conference on Economic Measurement.Andrew Aitken's article on "Measuring welfare beyond GDP" is free for all to read and blogs have appeared on our website since with the highlights of all the articles behind the paywall. "Dutch imports: used in the economy or re-exported?" by Oscar Lemmers, has proved particularly popular.
By special arrangement with our publishers our latest assessments of the UK and World economy can be read free of charge in their entirety here. Our UK forecast, with its recession warning, received an extraordinary level of media coverage. This comment piece by our Director Jagjit Chadha (originally produced for the New Statesman) sums up the economic situation inherited by the new Prime Minister.
Other research highlights and papers
Thanks to the IAA funding from the ESRC we have started to produce Topical Briefings reviewing the evidence or updating our analysis on a variety of economic and social issues. Our first three Briefings are:
Overview of evidence on UK public attitudes to immigration, by Johnny Runge Overview of evidence on economic impacts of EU immigration, by Johnny Runge Industry and Regional Effects of a No-Deal Brexit, by Arno Hantzsche
We released a number of other reports, including two new reports with Impetus contributing to the Youth Jobs Gap research series, which uses new Longitudinal Education Outcomes data to present new insights into disadvantaged young people’s transition from compulsory education into employment.
The Employment Gap in the West Midlands, by Stefan Speckesser and Hector Espinoza
The Employment Gap in the North West, by Stefan Speckesser and Hector Espinoza
Recent Discussion Papers include:
The Indeterminacy Agenda in Macroeconomics, by Roger Farmer
Tax Policy for Innovation, by Bronwyn Hall
Some International Evidence for Keynesian Economics Without the Phillips Curve, by Roger Farmer and Giovanni Nicolo'
We continued to produce monthly GDP Trackers (you can see past releases and the schedule for future releases here) and monthly Wage Trackers (find past releases and the schedule for future releases here). You can also subscribe to receive updates on new Discussion Papers; find all of our subscription options here.
Blog highlights
Aside from comments relating to the Review, we also published a number of popular blogs by our researchers including:
"What would lead us to revise our Brexit impact estimates? It’s the politics, stupid …" by Arno Hantzsche;
"New immigration policy: a bitter pill to swallow for those who give us our daily bread", by Heather Rolfe;
"Why the Chancellor will not meet the fiscal mandate", by Arno Hantzsche and Garry Young;
"Freeports, like free lunches, might come with strings attached", by Marta Paczos;
"A Governor for our Brexit Times", by Jagjt Chadha;
"Policy in the age of Global Value Chains: what is the way forward?", by Marta Paczos and Ana Rincon-Aznar.
Events this past quarter
We has a really busy summer. Highlights of our events include an all-day workshop on "Global Value Chains: Current developments and implications for Europe" in early June with Innovate UK and Coriolis, which brought together the work by leading European research institutes, international organizations and private sector initiatives to discuss and identify the most relevant research and policy priorities for the near future. The three sessions were live-streamed and can be watched here, here and here.
A few days alter our library was packed again for David Blanchflower in conversation with Dr Gertjan Vlieghethe about his latest book: "Not Working - Where Have All the Good Jobs Gone?" A live-stream of what proved a very lively event is available here.
Later that month the second Anglo-German Foundation Lecture supported by NIESR took place at the DIW Institute in Berlin. Profesor David Miles presented "How unfair is GDP? The half-life of Economic Injustice".
In July we held several events linked to our latest Review, including a press conference, and Briefings for Economists and Embassies. Members of our Macro Team travelled to St Louis for a workshop on "Modelling the macroeconomy in risky times" organised jointly by NIESR, the OMFIF Foundation, the Centre for Macroeconomics, the Federal Reserve Bank of St Louis, and the Olin School of Business.
Last but not least on 14th August we held our second Business Conditions Forum, comprising of chief economists and senior economists from major survey organisations, economists from the official sector, and NIESR economists with a special interest in the UK. After exploring the impact of uncertainty on the UK economy in its meeting in May, this time the Forum asked whether the labour market is turning. You can find a summary of the discussion here.
Forthcoming events
Aside from the special events of the Festival of Social Sciences Week, featured above, we will be hosting a number of targeted briefings and workshops as well as public seminars.
14 October - Beyond Brexit: a programme for EU reform - This seminar will give a preview of policy ideas from the November 2019 NIESR Economic Review and will feature a panel of contributing authors including Jeremy Greenstock, Kate Barker and Tim Besley. Please find further details and RSVP contact here.
15 October - The 2019 Monetary and Financial Policy Conference held at Bloomberg HQ and co-hosted by NIESR will feature a session dedicated to the monetary policy framework here in the UK. In that session our Director, Jagjit Chadha, will present an e-book proposing a series of reforms that the Chancellor and the next Governor of the Bank should consider. You can register for the conference here.
29 October - We'll welcome journalists at our quarterly press conference to unveil our next UK and World forecasts (to be published the following day in NIESR's November Economic Review).
30 October - Economists' Briefing about our latest forecasts.
More information about what is coming up is available on our Events page.
Supporting NIESR
Now in its 82nd year, the Institute continues to be the truly independent voice of economics, carrying out research into the economic and social forces that affect people’s lives while receiving no core funding from government or other sources. You can support the Institute in its mission to shape and challenge policy in these uncertain times by becoming a Corporate Member.
Read herefor more information about the advantages of joining our Corporate Members' scheme and do not hesitate to contact our Director, Professor Jagjit Chadha, or get in touch to discuss what NIESR can do for you.
Figure
1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·The UK economy is on course to grow by 0.5 per cent in the third quarter of 2019 and by 0.3 per cent in the fourth quarter (figure 1). This would be
consistent with GDP growth of 1.3 per cent in 2019 as a whole, down slightly from 1.4 per cent in 2018 and 1.9 per cent in 2017.
·According to new ONS statistics published this morning, the UK economy grew by 0.3 per cent in the three months to August, driven by growth in the services
sector. This was a little stronger than we forecast last month, partly reflecting upward revisions to the June and July data. GDP fell by 0.1 per cent in the month of August, in line with our previous forecast.
·Recent surveys suggest that private sector output fell in September, with manufacturing being particularly weak. Nevertheless, even after pencilling
in flat output in September, we forecast GDP growth of 0.5 per cent in the quarter as a whole as the economy recovers from the particularly weak second quarter.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said : “Despite
better than expected GDP data, the underlying pace of growth in the United Kingdom is slow. The strongest source of private sector demand is household consumption, driven by real wage growth, but this is not sustainable without a pick-up in productivity growth,
and this seems unlikely in the near term.”
Please find the full analysis in the document attached
-------------------------------------------------
For more information please contact Luca Pieri on l.pieri@niesr.ac.uk or on 07405496121.
Kind Regards,
The Comms Team
PAOLA BUONADONNA
EAD OF COMMUNICATIONS AND ENGAGEMENT
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1923 (direct)
| +44 (0) 7710 484152 (mobile)
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
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This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
this email in error.
We have taken reasonable precautions to ensure this communication does not contain viruses. We cannot accept liability for any damage
your system sustains due to software viruses. You should carry out your own information security and virus checks before opening any attachments or following any links. The contents of this email may be intercepted, monitored and/or recorded by a third party.
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______________________________________________________________________
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National Institute of Economic and Social Research’s Wage Tracker
Labour market weathering an increasingly difficult economic environment
Figure 1 – Average weekly earnings growth (per cent per annum)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.8 per cent (excluding and including bonuses) in the three months to August
compared to the year before (figure 1).
With CPI inflation at 1.9 per cent in the three months to August, real wages grew at an annual rate of 1.9 per cent over the same period.
Private sector earnings data in August turned out to be in line with the estimate published in our Wage Tracker last month and public sector earnings data was only slightly weaker.
The Wage Tracker indicates that regular earnings growth will have stabilised at an annual rate of 3.8 per cent in the third quarter and is expected to remain largely unchanged
in the fourth quarter.
Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth of around 3½ per cent per annum in the third and fourth quarters
of 2019 while economic activity remains lacklustre.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said ““In the economy as a whole, employment and wage growth are now stabilising amidst global and domestic
uncertainties. While sectors engaging in international trade increasingly face difficulties, also affecting hiring and pay, domestically active service sectors are so far withstanding the economic challenges.”
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
2 Dean Trench Street, Smith Square, London SW1P 3HE +44 (0)020-7654-1923 (direct)
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View the latest discussion papers from the
National Institute of Economic and Social Research
"Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle" by Rebecca Riley, Ana Rincon-Aznar and Lea Samek. Read more here...
"A Century of High Frequency UK Macroeconomic Statistics: A Data Inventory" by Jagjit S Chadha, Ana Rincon-Aznar, Sally Srinivasan and Ryland Thomas. Read more here...
"The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015" by Justin Van de Ven and Nicolas Hérault. Read more here...
"What does leadership look like in schools and does it matter for school performance?" by Alex Bryson, Lucy Stokes and David Wilkinson. Read more here...
"Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle" by Rebecca Riley, Ana Rincon-Aznar and Lea Samek Discussion Paper no.508
We analyse new industry-level data to re-examine the UK productivity puzzle. We carry out an accounting exercise that allows us to distinguish general macroeconomic patterns from sector trends and idiosyncrasies, providing a roadmap for anyone interested in explaining the puzzle. We focus on the UK market sector. Average annual labour productivity growth was 2.5 percentage points lower during the period 2011-2015 than in the decade before the financial crisis that began in 2007. We find that several years on from the financial crisis stagnation remains widespread across detailed industry divisions, pointing to economy-wide explanations for the puzzle. With some exceptions, labour productivity growth lost most momentum in those industries that experienced strong growth before the crisis. Three fifths of the gap is accounted for by a few industries that together account for less than one fifth of market sector value added. In terms of why we observe continued stagnation, we find that capital shallowing has become increasingly important in explaining the labour productivity growth gap in service sectors, as the buoyancy of the UK labour market has not been sufficiently matched by investment, although our figures suggest that the majority of the productivity gap is accounted for by a TFP gap. The collapse in labour productivity growth has been more pronounced in the UK than elsewhere, but the broad sector patterns of productivity stagnation are in many respects similar across other advanced economies, emphasising the importance of global explanations for the puzzle. UK industries that saw the biggest reductions in productivity growth tended to be internationally competitive and more dependent on global demand than other industries. They were also industries where productivity is difficult to measure.
Read the full paper
"A Century of High Frequency UK Macroeconomic Statistics: A Data Inventory" by Jagjit S Chadha, Ana Rincon-Aznar, Sally Srinivasan and Ryland Thomas Discussion Paper no.509
This paper provides an inventory of the available macroeconomic statistics in the UK for the last hundred years or so. The focus is on documenting the higher frequency (daily, monthly and quarterly) macroeconomic data that are available after the World War 1, rather than longer run annual time series which has been the focus of other collections. It discusses some of the challenges that need to be overcome in order to create a continuous historical dataset over this period. The inventory follows the structure of the Economic Trends Annual Supplement (ETAS) that was produced for many years by the Office for National Statistics. It covers statistics on National Accounts, prices, labour market indicators, selected demand and output indicators and financial market data (including money and credit aggregates). Using this structure the paper explores to what extent it is possible to create a consistent, usable and comprehensive high frequency macroeconomic dataset back to the 1920s and earlier.
Read the full paper
"The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015" by Justin Van de Ven and Nicolas Hérault Discussion Paper no.510
An issue of interest in the literature that explores the drivers of inequality is the distributional bearing of tax and transfer policy, where an important theme concerns changes in the relative treatment of alternative population subgroups. We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by a tax and transfer system. We apply this approach to UK data reported at annual intervals between 1968 and 2015, documenting remarkable improvements in tax and transfer treatment enjoyed by some population subgroups – particularly families with children and age pensioners – relative to the wider population. We show that accounting for the changing value judgements implicit in tax and transfer policy provides a fresh perspective on the evolution of income inequality and redistribution; one that departs from the prevailing view that UK inequality stopped rising from the early 1990s.
Read the full paper
"What does leadership look like in schools and does it matter for school performance?" by Alex Bryson, Lucy Stokes and David Wilkinson Discussion Paper no.511
We consider the role played by school leaders in improving pupil attainment, going beyond previous studies by exploring the leadership roles of deputy and assistant heads and classroom-based teachers with additional leadership responsibilities. Using panel data for state-funded secondary schools in England for the period 2010/11-2015/16 we find academy schools typically employ more staff in leadership roles than community schools. Increases in the number of staff in leadership roles below headship level are associated, at least to some extent, with improved school performance in Single Academy Trusts, but this is not the case for schools that are part of Multi Academy Trusts. Our findings suggest that the potential benefits of distributing leadership within schools may only be realised when leaders have sufficient autonomy.
Read the full paper
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Figure
1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·The UK economy grew by 0.3 per cent in the third quarter of 2019 and is on course to grow by 0.2 per cent in the fourth quarter (figure 1). This would be consistent with GDP growth
of 1.2 per cent in 2019, down slightly from 1.4 per cent in 2018.
·According to new ONS statistics published this morning, the UK economy grew by 0.3 per cent in the third quarter, driven by growth in the services sector. This was a little weaker
than we had forecast last month, partly reflecting downward revisions to the July and August data. GDP fell 0.1 per cent in the month of September, the second consecutive monthly fall, slightly weaker than our previous forecast.
·Recent surveys suggest that private sector output was flat in October. Nevertheless, we are expecting some growth in public sector output and so are forecasting growth of 0.2 per
cent in the fourth quarter.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said:
“The latest data confirm that the underlying pace of growth in the United Kingdom is slow, reflecting weak business investment growth. GDP fell slightly in August and September and the latest surveys point to further stagnation at the
end of the year. The economy is being held back by weak productivity growth and low investment due to chronic levels of uncertainty.”
Please find the full analysis in the document attached
-------------------------------------------------
For more information please contact Luca Pieri on
l.pieri@niesr.ac.uk or on 0207 654 1931.
Kind Regards,
The Comms Team
----------------------------------
LUCA PIERI
RESEARCH COMMUNICATION MANAGER
NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH
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National Institute of Economic and Social Research’s Wage Tracker
Figure 1 – Average weekly earnings growth (per cent per annum)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.6 per cent (excluding and including bonuses) in the three months to September compared to the year before
(figure 1).
With CPI inflation at 1.8 per cent in the three months to September, real wages grew at an annual rate of 1.8 per cent over the same period.
Earnings growth was slower in September than at its recent peak in the three months to June and softer than the estimate we published in our Wage Tracker last month. In particular private sector earnings
data was weaker than forecast, partly as a result of downward revisions to past data.
The Wage Tracker indicates that regular earnings growth will remain just above 3½ per cent in the fourth quarter of 2019.
Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth of around 3-3½ per cent per annum in the fourth quarter, which is somewhat softer than in previous
quarters.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said“As the country approaches the general election, hiring activity is continuing to soften and the pace of earnings growth is slowing, suggesting that elevated uncertainty and a lack of growth
momentum are increasingly taking a toll on the labour market”.
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National Institute of Economic and
Social Research
General Election 2019 Newsletter
NIESR is aiming to improve the level of public understanding and the quality of media coverage of the key issues facing voters on 12 December.
As well as providing data and illustrative charts, we have published compact briefings that further the understanding of public policy questions while our expert economists have made a number of podcasts and vodcasts. Where manifestos touch on the topics we will integrate a balanced assessment of party policies. You can see a selection of our work below.
Once the dust has settled after the election result, these issues will also be some of the most pressing facing the new government in the months and years to come. So please continue to read these briefings even after the Election. We would like to thank The Nuffield Foundation for their support.
Our Research Briefings focus on:
The Economy and Brexit???
The Current Economic Backdrop
The Fiscal and Macroeconomic Impact of Political Parties’ Proposed Policies (two briefings)
The Economic and Fiscal Impact of Brexit
Assessment of Monetary and Fiscal Policy Frameworks
Regions, Productivity and Trade
Places and Spaces: Mapping Britain's Regional Divides
Trade and Trade Policy after Brexit
Education
Education Policy Priorities and a look into the Manifestos
Minimum Wages
Immigration
You can listen to new, snappy 10-minute podcasts of chats between our economists examining four key issues:
Minimum Wages
The Economy
Education Policy
Regional Divides
There is a series of 6 vodcasts where NIESR staff explain some of the key issues in less than three minutes each:
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·The UK economy is on course to grow by 0.1 per cent in the fourth quarter (figure 1). This would be consistent with GDP growth of 1.3 per cent in 2019, down slightly from 1.4 per cent in 2018.
·According to new ONS statistics published this morning, the UK economy grew by 0.0 per cent in the three months to October, this was marginally weaker than the 0.1 per cent growth that we had expected
last month. Output rose slightly in October in the production and service sectors, but dropped unexpectedly sharply in construction.
·Recent surveys suggest that service sector output was little changed in November, with contractions in manufacturing and construction.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said:“The latest data confirm that economic growth in the United Kingdom is petering out at the end of the year. GDP was flat in the three months to October, and the latest surveys point to further stagnation in November and December. The
economy is being held back by weak productivity growth and low investment due to chronic levels of uncertainty.
While some uncertainty could be resolved by the outcome of the general election, it is doubtful that this will provide businesses with the clarity needed to invest with confidence.”
Please find the full analysis in the document attached
-------------------------------------------------
For more information please contact Phil Thornton on
p.thornton@niesr.ac.uk / 0207 654 1923 or Luca Pieri on
l.pieri@niesr.ac.uk/ 079 305 44631
Kind Regards,
The Comms Team
----------------------------------
Check out our General Election 2019 Analysis
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Season's Greetings from all of us at the
National Institute of Economic and Social Research We'd like to share some of the highlights of 2019 with you, and wish you all the very best for 2020
The General Election
With funding from the Nuffield Foundation, we were once again able produce valuable, balanced research in the lead up to the General Election on the 12th December. With 9 election briefings, 6 vodcasts and 5 podcasts, we were able to look at the issues facing the next government from migration, the economy and regional inequalities (and much more besides).
National Institute Economic Review
Our February Review looked at Productivity and was introduced by our Director, Jagjit S Chadha - "Productivity: Past, Present and Future"
In May, we turned our attention to immigration policy, looking at the "Challenges for Immigration Policy in Post-Brexit Britain" (introduction).
August's edition looked at economic measurement, from measuring welfare to emergent economic activities.
November saw our 250th edition of the Economic Review, looking at the landscape in the UK "Beyond Brexit: A Programme for UK Reform". Featuring a bumper crop of 13 articles, covering trade, foreign policy, infrastructure and much more, the whole journal is free to view to mark our 250 milestone.
From 2020, the Review will be moving publisher from Sage to Cambridge Univerity Press. It would be extremely useful if you could take some time to complete this short surveyon the Review to help shape its future.
Brexit
We continued to cover the Brexit debate, producing a number of important articles and blogs. You can view these on our dedicated Brexit pages here. These included our 250th edition of our Economic Review, with no less than 13 essays on "Beyond Brexit". See the Review section above.
ESRC Impact Acceleration Award
In recognition for its growing profile and its commitment to impact and engagement, NIESR was awarded an Impact Acceleration Account (IAA) from the Economic and Social Research Council in Spring of this year. As part of this, NIESR was delighted to host its first ever Festival of Social Sciences from 4th-9th November. With events ranging from the inaugural lectures of two brand new series to an open lecture on the emotional economics of football fans, it was an engaging and dynamic week. You can view highlights of the week here and take a look at the full programme here.
Research
Some key outputs this year included:
Education & Labour
“Changing Mindsets: Effectiveness trial” - The Changing Mindsets project aimed to improve attainment outcomes at the end of primary school by teaching Year 6 pupils that their brain potential was not a fixed entity but could grow and change through effort exerted.
“Establishing the Employment Gap” - This report establishes for the first time an employment gap between young people from disadvantaged backgrounds and their better-off peers: disadvantaged young people are twice as likely to not be in employment, education or training (NEET).
Employment & Social Policy
“Understanding employers’ use of the National Minimum Wage youth rates” – a detailed review of the policies around training, education and support to work for young people, as well as research findings on how employers set pay for young workers (commissioned by the Low Pay Commission)
“Promoting Ethnic and Religious Integration In Schools: A Review of Evidence” - Religious and ethnic segregation in schools is an issue of concern for educationalists and policy makers because it has implications for equality and for inclusion and social cohesion. This report was commissioned by the Department for Education to provide evidence on how segregation might be addressed by reviewing available evidence on approaches in place to promote religious and ethnic integration in education settings.
Macroeconomics
The Macroeconomic and Modelling Team introduced two new “Tracker” services this year, alongside their GDP Tracker. The Wage and CPITrackers are released on the same day as ONS releases. Our UK and World quarterly forecasts are available on our website, as well as our new Business Conditions Forumwhich launched in May 2019.
Trade, Investment & Productivity
“Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle” – In this Discussion Paper, the authors analyse new industry-level data to re-examine the UK productivity puzzle.
“Regional Economic Disparities and Development in the UK” – This policy paper explores the evolution of regional economic disparities in the UK from the 1960s until now.
ESCoE Our partners ESCoE had a busy year, including hosting their second conference on Economic Measurement. More details on ESCoE’s work here. Rebuilding Macroeconomics Rebuilding Macroeconomics also held their second annual conference, to discuss what interdisciplinary research can offer macroeconomics. More details on Rebuilding Macroeconomics work here.
Along with ESCoE and Rebuilding Macroecocomics we were also delighted to take part in this year's Royal Economic Society Annual Conference
New Occasional Paper
In October, after a break of 15 years (!), we launched NIESR Occasional Paper no 58 "Renewing our Monetary Vows - Open Letters to the Governor of the Bank of England" (edited by Jagjit Chadha and Richard Barwell). The paper proposes a series of reforms that the Chancellor and the next Governor of the Bank should consider. You can download the paper here or buy a bound paper copy for £10 (+£1.50 p&p)
Stay Updated!
Don't forget, you can sign up to receive our latest updates on GDP, CPI, Wages, DIscussion Papers and this quarterly Newsletter (tell your friends!)
Figure 1 – Average weekly earnings growth (per cent per annum)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.5 per cent excluding bonuses in the three months to October compared to the year before (figure 1).
Total earnings growth including bonuses was 3.2 per cent over the same period, with the drop relative to the previous quarter being explained by higher than usual bonus payments in October 2018 but normal
bonus contributions in the same month this year.
With CPI inflation at 1.6 per cent in the three months to October, real wages grew at an annual rate of 1.8 per cent over the same period excluding bonus payments (1.5 per cent including bonuses).
The Wage Tracker indicates that nominal earnings growth excluding bonuses will have been around 3½ per cent in the fourth quarter of 2019, and just above 3 per cent if bonus payments are taken into account.
Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth picked up to more than 3½ per cent per annum in the fourth quarter, higher than what new ONS estimates
suggest unit labour cost growth has been for the last two years.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said:“Earnings growth has softened slightly in recent months. With the general election removing some of the political uncertainty, there is a chance for a renewed pick-up in pay dynamics as we enter
the new year. But with real wage growth outpacing productivity improvements and unit labour cost growth elevated, such a pick-up would unlikely be sustained.”
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National Institute of Economic and Social Research’s
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·The UK economy is on course to post zero growth in the fourth quarter of 2019, consistent with growth of 1.4 per cent in 2019 as a whole. On the basis of recent trends we tentatively
forecast service sector-driven growth of 0.3 per cent in the first quarter of 2020 (figure 1).
·According to new ONS statistics published this morning, the UK economy grew by 0.1 per cent in the three months to November, a little faster than we had expected last month reflecting
upward revisions to the September and October data.
·Output fell by 0.3 per cent in November itself, with falls of 0.3 per cent in services and 1.7 per cent in production outweighing an increase of 1.9 per cent in construction. Monthly
data is volatile and the forecast improvement in growth in the first quarter of 2020 assumes that the weakness in services in November proves to be temporary.
·Recent surveys suggest that economic activity was little changed in December, though there is some evidence of an improvement in business sentiment after the election.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said:“The latest data confirm that economic growth in the United Kingdom had petered out at the end of last year. GDP was virtually flat in the three months to November
and the latest surveys point to further stagnation in December. While there is some evidence of an improvement in business optimism following the general election, it is doubtful that this will
do much to change the short-term economic outlook of further lacklustre growth.”
Please find the full analysis in the document attached
For more information please contact Phil Thornton on
p.thornton@niesr.ac.uk / 0207 654 1982 or Luca Pieri on
l.pieri@niesr.ac.uk/ 079 305 44631
Kind Regards,
The Comms Team
----------------------------------
Check out our General Election 2019 Analysis
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
in England and Wales (charity registration number 306083).
This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
this email in error.
We have taken reasonable precautions to ensure this communication does not contain viruses. We cannot accept liability for any damage
your system sustains due to software viruses. You should carry out your own information security and virus checks before opening any attachments or following any links. The contents of this email may be intercepted, monitored and/or recorded by a third party.
We exclude any liability arising from any interception.
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National Institute of Economic and Social Research’s Wage Tracker
Figure 1 – Average weekly earnings growth (per cent per annum)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.4 per cent excluding bonuses in the three months to November compared to the year before,
and by 3.2 per cent if bonus payments are taken into account (figure 1).
Earnings growth in the public sector was in line with forecasts published in our Wage Tracker one month ago while private sector outturns were again marginally weaker than forecast.
With CPI inflation at 1.6 per cent in the three months to November, real wages grew at an annual rate of 1.8 per cent over the same period excluding bonus payments (1.6 per cent including
bonuses).
The Wage Tracker indicates that nominal earnings growth excluding bonuses will have been 3.3 per cent in the fourth quarter of 2019 and is expected to remain around 3½ per cent in the first
quarter of 2020.
Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth eased to around 3 per cent per annum in the fourth quarter and is expected to
stay at this rate in the first quarter of 2020.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said: “As expected, earnings growth continued to soften
a little towards the end of last year but employees should see 2020 start with stronger real pay growth as demand for workers is holding up, inflation eases and upratings in the National Living Wage and minimum wages will benefit those on low incomes.”
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National Institute of Economic and Social Research’s
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·Latest economic data confirms that the UK economy posted zero growth in the fourth quarter of 2019, consistent with annual growth of 1.4 per cent in 2019.
We expect a service sector-driven growth of 0.2 per cent in the first quarter of 2020, marginally revised from our forecast last month (figure 1).
·Data published this morning by the ONS suggest that the UK economy grew by 0.0 per cent in the three months to December, consistent with what we had forecast
last month.
·Output increased by 0.3 per cent in December itself, largely reflecting growth in the services sector.
·Recent surveys show that all major sectors recorded an improvement in performance in January, primarily due to receding political uncertainty.
Dr Kemar Whyte, Senior Economist, said:“The UK is benefitting from a post-election boost to business and consumer confidence,
latest survey evidence confirms. However, there is no guarantee that this will be sustained. The latest data confirm that economic growth in the United Kingdom had stagnated at the end of 2019. Despite the post-election bounce to confidence, the potential
complexity of trade negotiations with the EU means a high degree of uncertainty could resurface, which would weigh heavily on economic growth.”
Please find the full analysis in the document attached
For more information please contact Phil Thornton on
p.thornton@niesr.ac.uk / 0207 654 1954 or Luca Pieri on
l.pieri@niesr.ac.uk/ 079 305 44631
Kind Regards,
The Comms Team
----------------------------------
Check out our General Election 2019 Analysis
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
in England and Wales (charity registration number 306083).
This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
this email in error.
We have taken reasonable precautions to ensure this communication does not contain viruses. We cannot accept liability for any damage
your system sustains due to software viruses. You should carry out your own information security and virus checks before opening any attachments or following any links. The contents of this email may be intercepted, monitored and/or recorded by a third party.
We exclude any liability arising from any interception.
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National Institute of Economic and Social Research’s Wage Tracker
According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.2 per cent excluding bonuses
in the three months to December 2019 compared to the year before, and by 2.9 per cent if bonus payments are taken into account (figure 1).
Earnings growth in the public sector was in line with forecasts published in our Wage Tracker one month ago while private sector
outturns were slightly weaker than forecast, mainly because of smaller bonus payments in December last year.
With CPI inflation at 1.4 per cent in the three months to December, real wages grew at an annual rate of 1.8 per cent over the
same period excluding bonus payments (1.4 per cent including bonuses).
The Wage Tracker indicates that nominal earnings growth excluding bonuses will be 3½ per cent in the first quarter of 2020 and
just above 3 per cent including bonuses.
Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth eased to around 3 per cent per annum
in the fourth quarter and is expected to stay at this rate in the first quarter of 2020.
“The recent slowdown in earnings growth is expected to be temporary as there is little slack in the labour market and the number of vacancies ticked up. Real average weekly earnings
are only back to their 2008 levels, which illustrates the long-lasting impact of the financial crisis on the average British worker. Cyrille Lenoel, Senior Economist in Macroeconomic Modelling and Forecasting
For further information please contact
Phil Thornton or Sarah Stevens
on 020 7222 7665 / 0207 654 1954p.thornton@niesr.ac.uk /
s.stevens@niesr.ac.uk
National Institute of Economic and Social Research
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Smith Square
London, SW1P 3HE
United Kingdom
Switchboard Telephone Number: 020 7222 7665
Website:
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This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
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and/or recorded by a third party. We exclude any liability arising from any interception.
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NIESR May 2020 Newsletter
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National Institute of Economic and Social Research
Newsletter - May 2020
Welcome to NIESR's newsletter, a regular catch-up with our activities and preview of the coming weeks.
NIESR has followed government advice regarding the global pandemic. We are all working from home. Other than that, it''s business as usual! Authoritative and independent analysis has never been more needed than now - and we''re here to help. Please get in touch if we can work together in any way.
Our excellent networks, state of the art modelling, cross-disciplinary research and economic measurement makes NIESR ideally placed to lead debate on the social and economic impact of the Coronavirus. We have started to publish a range of perspective from our staff and partners, and will continue to do so over the coming weeks. We have collated the research on our website here, and will continue to update this page.
May 2020 GDP, Wage and CPI Trackers Out Now
This month, our GDP Tracker found that the economy is contracting at a rapid pace. The ONS preliminary estimates suggest that growth declined by 2.0 per cent in the first quarter of 2020, broadly consistent with what we suggested it could be last month. In light of the preliminary release, we forecast growth in the second quarter to decline sharply by about 25 to 30 per cent. Read more here.
OurWage Trackerthis monthlooks at the first signs of the severe labour market impact of COVID-19. Official labour market statistics are mainly lagging indicators and are only just beginning to show the impact of COVID-19. By early May a quarter of paid employees had been furloughed, with 80 per cent of their pay (up to ?2,500 per month) being met by the government. This will mean that measured average earnings will fall in the short term, reflecting the lower pay of those who have been furloughed. Read more here.
Our May CPI Trackerfound that underlying inflation increased by 0.3 percentage points to 1 per cent in the year to April 2020, as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes. The historical relationship between current trimmed mean inflation and future CPI inflation implies CPI inflation of 2.1 per cent in the year to April 2021. Read more here.
Our trackers are an invaluable tool during these uncertain times. We acknowledge that forecasting is subject to errors, and so is a hazardous exercise. However, that does not by itself invalidate the exercise because both the producers and consumers of forecasts understand that errors will occur. Forecasting allows us to think about possible futures and plan accordingly.
New Projects
Potential Destitution and Foodbank Demand Resulting from COVID-19 Crisis In UK
We are assisting the Trussell Trust(Britain's largest provider of foodbanks) by conducting a short term piece of research to address key questions about the potential impact of the COVID-19 emergency on destitution and the demand for foodbank services across the UK in the coming weeks and months. Craig Thamotheram, Senior Economist at NIESR, is the project leader.
Modelling the Impact of the Coronavirus Pandemic on the UK economy
Funded by ESRC, and partnering with BEIS and the Cabinet Office, this projectseeks to use and develop NIESR's modelling capability to estimate the short- term impact of the coronavirus pandemic on the UK economy, and to assess longer-term issues on how the economic recovery is affected by different policy measures. Garry Young, Deputy Director of NIESR, is the project leader.
Estimating Food and Drink Demand Elasticities
Funded by the Department for Environment, Food and Rural Affairs, this project is about estimating demand elasticities for food and drink which allow us to understand both the short-term and long-term consumer responses to changes in prices and income, including from different socio-economic groups.
This project is with colleagues at NIESR (Ana Rincon-Aznar, Larissa Marioni and Elena Lisauskaite) and with colleagues at Birkbeck (Sandeep Kapur, Ron Smith & Walter Berkert).
IAA Grant
In a second tranche of funding from the Economic and Social Research Council, we have received supplementary funding under their Impact Acceleration Award scheme. This will allow us to apply NIESR research to a wide range of Coronavirus policy debates over the next six months. If you would like to hear more about how you can partner with NIESR, whether through the IAA or otherwise, please do get in touch.
New Partnership with the University of Glasgow
On Tuesday 12 May we held a joint webinar with the University of Glasgow: "Covid Crisis: What Next for The UK and World Economy?" where NIESR Director Jagjit Chadha outlined the prospects for the UK and world economy in light of the Covid-19 crisis Sir Anton Muscatelli chaired the session.
The event was part of a much bigger collaboration which is developing between NIESR and the University of Glasgow. As a starting point, we will together apply NIESR''s internationally renowned forecasting and modelling expertise to Scotland, and the University will become a partner in NIESR''s UK and global forecast. The Institute has also offered to host students on the University of Glasgow''s new masters course in Data Analytics in Finance for their project work, and we are exploring possible joint appointments.
National Institute Economic Review Issue 252 Out Now
The May edition of the National Institue Economic Review focuses on new research exploring the rise of Global Value Chains (GVCs). It is becoming clear that the economic and social consequences of the current pandemic will be profound and long-lasting, and still largely uncertain, and highlight the extent to which the economic crisis is transmitted not only through domestic policies but also through severe disruption to trade in global supply chains. This undoubtedly implies widespread changes to the way in which countries and firms will trade in future decades, which will recognise the globalised scope of shocks.
In the NIESR May Review, Leading experts in the field provide in-depth analysis of various aspects of this major issue in world trade. The articles cover a wide range of topics, from protectionism, to the impact from COVID-19 and Brexit, the declining EU share in global manufacturing, as well as other key trends affecting UK and European industries. For a limited time only, the review is not behind a paywall andis available to read for free here.
Subscribe to the National Institute Economic Review
NIESR in the Media
NIESR Director Jagjit Chadha was interviewed on BBC Radio 4 on 19 May 2020 to discuss the latest unemployment figures. You can listen here.
NIESR Director Jagjit Chadha was interviewed on BBC Radio 5 Live on 19 May 2020 to discuss the latest economic figures and the unemployment statistics. You can listen here (from 21 mins).
Garry Young, Deputy Director of NIESR was interviewed on LBC Radio on 19 May 2020 to discuss the latest unemployment figures. You can listen here
"Why Covid-19 should change the conversation on migrant workers" in the New Statesmen by Andrew Aitken, Senior Economist at NIESR, and Chiara Manzoni, Senior Social Researcher at NIESR (18 May 2020)
Garry Young, Deputy Director of NIESR was interviewed on BBC Radio 4 on 14 May 2020 to discuss the ONS GDP data and our GDP Tracker. You can listen here.
"How bad is the economic damage looking-and what are the prospects for recovery?" in Prospect Magazine by Jagjit Chadha, NIESR Director (13 May 2020)
NIESR Director Jagjit Chadha was one of the contributors in BBC Radio 4''s The Briefing Room episode "Coronavirus and the economy" (from approx 17mins in) that took place on 9 May 2020
NIESR Alumni
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National Institute of Economic and Social Research's
GDPTracker
GDP could contract by 15 to 25 per cent in second quarter
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Note: Grey and Burgundy bars show high and low scenarios
Main points
Once in a century event poses major threat to UK growth. The UK economy could now see growth decline by 5% in
the first quarter of 2020, and if a lockdown continues, by around 15% to 25% in the second quarter (figure1.)
According to new ONS statistics published this morning, the UK economy expanded by 0.1 per cent
in the three months to February, only marginally weaker than what we had forecast last month.
Output declined in February itself, mainly due to a large fall in the construction sector.
We project growth for March to give a Q1 view and also a view on Q2. The lockdown is causing
the largest contraction in economic activity since 1921.
Lockdowns reduce overall activity by around 20% in every month of their operation with larger
effects possible in other sectors, particularly if the lockdowns are prolonged.
Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting, said:"The UK economy is now almost certain to experience a major contraction in the second quarter of the year. The forceful impact of COVID-19 and the global lockdown has thrust the economy
into unknown territory where we could see GDP declining at a record quarterly rate. Nonetheless, instant and significant recovery remain a distinct possibility if the spread of the virus comes to halt quickly."
Please find the full analysis in the document attached
For more information please contact Luca Pieri on
l.pieri@niesr.ac.uk /
Chloe Ridyard c.ridyard@niesr.ac.uk
/ 079 305 44631
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The Comms Team
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National Institute of Economic and Social Research's Wage Tracker
First Signs of Severe Labour Market Impact of COVID-19
Figure 1 - Average weekly earnings growth (per cent per annum)
1 -
Average weekly earnings growth (per cent per annum
Main points
?Official labour market statistics are mainly lagging indicators and are only just beginning to show the impact of Covid-19 which started to affect the UK economy
from around the middle of March.
?According to new ONS statistics published this morning, employment was at a record high in the first three months of the year and average weekly earnings, excluding
bonuses, were growing at an annual rate of 2.7 per cent, or around 1 per cent in real terms.
?But
in the final week of March, the total number of hours worked was around 25% smaller than in other weeks within the quarter. This reflects the large number of people being furloughed. Furloughing has helped
to limit the rise in unemployment. The unemployment claimant count rose by 850,000 to 2.10 million in April. The number of vacancies fell to 351,000 in April, from 750,000 in March.
?By early May a quarter of paid employees had been furloughed, with 80 per cent of their pay (up to ?2,500 per month) being met by the government. This will
mean that measured average earnings will fall in the short term, reflecting the lower pay of those who have been furloughed. An early sign of this was that median monthly pay fell by ?55 in April to ?1789
per month.
Dr Garry Young, Deputy Director at NIESR, said: "The extent of the economic fallout from Covid-19 is becoming clearer. Many businesses
are under severe financial pressure and are only able to retain staff because of the government's furlough scheme which is currently supporting 7?
million jobs. Despite this, claimant unemployment rose above two million in April, the highest level since 1996, and it is very likely that we will see falls in pay in the months ahead."
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NIESR February 2020 Newsletter
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National Institute of Economic and Social Research
Newsletter - February 2020
Welcome to NIESR's newsletter, a quarterly catch-up with the main publications, events and media stories the Institute has been involved with and a look ahead to what we are planning for the next quarter.
Economic Review No.251 - "The Economic Implications of Climate Change Mitigation Policies"
Our 251st edition looks at some of the economic issues involved in acting to cut greenhouse gas emissions to a level consistent with the ambition to limit global temperature increases. Together they help explain why progress in tackling this "urgent problem" is likely to be slow even though "we know how to do it". You can read the introduction here.
From 2020, our Economic Review is published by Cambridge University Press. You can subscribe to the Review here and subscribe to receive email alerts here.
Forthcoming events
We have a full programme of events for Spring-Summer 2020. Events include Lord Sainsbury discussing his book exploring a new theory of productivity; Robert Frank (New York Times best selling author and Economics columnist) on how peer pressure can persuade us to do more for the environment in his new book "Under the Influence"; and Prof. Jutta Allmendinger, award winning sociologist, will give a lecture on housing poverty and how this is increasingly affecting the working population.
More information about what is coming up is available on our Events page or via this link.
Events this past quarter
We hosted the Macroprudential Policy and Practice Roundtable in January, along with a Youth Jobs Gap policy workshop on Youth Unemployment. We launched our new Parliament and Government Unit, to offer support for briefings, presentations, and other activities for parliamentary and government organisations. Alongside our regular Economists'' Briefing to accompany our Economic Review, we also held our regular Embassies Briefing.
Britain after Brexit
Now that we have formally left the EU and move towards the end of the transition period, our focus moves to Britain after Brexit. You can view our latest research and comment pieces on this topic here.
Blog highlights
"Breaking out of the Doldrums" by Jagjit Chadha
"The precarious success of the national minimum wage" by Johnny Runge
"We forgot about immigration - will this turn out to be a grave mistake?" by Johnny Runge
Senior Microeconomist wanted
We are seeking a Senior Microeconomist to lead a small team in generating and delivering projects in our portfolio of microeconomic research. Applications from any area of work will be considered, but we are particularly interested in candidates with strengths in the areas of productivity, trade, investment, economic measurement, regional and welfare economics education, employment and the labour market. This role is a key member of the NIESR senior management team. Further details here.
Sign up
We continued to produce monthly GDP Trackers (you can see past releases and the schedule for future releases here), monthly Wage Trackers (find past releases and the schedule for future releases here), and monthly CPI Trackers (find past releases and the schedule for future releases here). You can also subscribe to receive updates on new Discussion Papers and all of our subscription options here.
Supporting NIESR
Now in its 82nd year, the Institute continues to be the truly independent voice of economics, carrying out research into the economic and social forces that affect people's lives while receiving no core funding from government or other sources. You can support the Institute in its mission to shape and challenge policy in these uncertain times by becoming a Corporate Member.
Read herefor more information about the advantages of joining our Corporate Members'' scheme and do not hesitate to contact our Director, Professor Jagjit Chadha, or get in touch to discuss what NIESR can do for you.
Copyright ? 2020 NIESR, All rights reserved.
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NIESR Newsletter - 1 July 2020
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National Institute of Economic and Social Research
Newsletter - 1 July 2020
Welcome to NIESR's newsletter, a regular catch-up with our activities and preview of the coming weeks.
Our excellent networks, state of the art modelling, cross-disciplinary research and economic measurement makes NIESR ideally placed to lead debate on the social and economic impact of the Coronavirus. Authoritative and independent analysis has never been more needed than now - and we''re here to help. Please get in touch if we can work together in any way.
We have started to publish a range of perspectives from our staff and partners, We have collated the research on our website here and will continue to update this page.
Economics Observatory
The Economics Observatory launched this month. Funded by the Economic and Social Research Council, the Economics Observatory is a cross-institutional initiative that seeks to answer questions from policy-makers and the public about the economics of the coronavirus crisis and the recovery.
We are delighted to be a key partner with many NIESR staff answering some of the key questions on the issue.
READ MORE HERE
Recent Webinars
''Covid-19: Deficits, Debt and Fiscal Strategy'' - Wednesday 1 July
In this special joint webinar the National Institute of Economic and Social Research (NIESR) and the Institute for Fiscal Studies (IFS) will examined the impact of the Covid-19 crisis on the public finances.
Deputy Director of NIESR, Dr Garry Young, outlined some of the possible macroeconomic scenarios. IFS Deputy Director, Carl Emmerson discussed the government's response and the impact on the public finances. Director of NIESR, Professor Jagjit Chadha looked at measures of how much fiscal space there is and risks associated with elevated debt and deficits. The event was chaired by Paul Johnson, Director of the IFS.
View a recording of the webinar here.
Impact and Additionality Assessment in the time of COVID-19 - Tuesday 30 June
Hosted by Bruegel and the European Investment Bank, this webinar focused on understanding the impact and additionality of policy interventions. Iana Liadze, Principal Economist at NIESR, spoke on ''measuring policy impact at macro level - can models help us understand the impact of crisis response?''.
View a recording of the webinar here.
RES Webinar: Monetary Policy Tools in the COVID-19 Crisis - Thursday 25 June
Coronavirus has led to more innovation in monetary policy at pace than at any time since the 2008-09 global financial crisis. The tools being deployed around the world have led to fundamental questions about central bank independence, the traction of monetary policy and how it should operate in a post-Covid world. Organised by Jagjit Chadha, Director of NIESR, and chaired by Chris Giles, Economics Editor of the Financial Times, an expert panel of academics and former central bankers explored the new world of monetary policy.
View the recording of the webinar here.
New Projects
Climate Change Scenarios
Funded by RBS and sub-contracted by Vivid Economics, this project will focus on producing a set of climate change scenarios. Amit Kara, Associate Research Director for Global Macroeconomic Analysis at NIESR, and Ian Hurst, Associate Research Director for Model Development at NIESR, are working on this project.
Social and Political Economy Programme
This is a research project funded by NIESR to engage Prof. Adrian Pabst (University of Kent and NIESR Deputy Director) to conduct research on the complex connections of state, market and civic institutions with a focus on questions of relational prosperity and human flourishing. The work involves grant applications, academic publications, policy reports and impact.
Public Understanding of Economics - Stakeholder Engagement
This ESRC IAA project is based on our ESCoE project about Public Understanding of Economics and Economic Statistics. Johnny Runge, Senior Social Researcher at NIESR, will present and discuss the findings to a range of stakeholders during informal meetings, and identify implications and recommendations on how to improve the communication of economic issues and economic statistics. The stakeholders will include the ONS, Bank of England, researchers and academics, government departments, third-sector organisations, and journalists. The work will be summarised in a brief report.
Estimating Food and Drink Demand Elasticities
Funded by the Department for Environment, Food and Rural Affairs, this project is about estimating demand elasticities for food and drink which allow us to understand both the short-term and long-term consumer responses to changes in prices and income, including from different socio-economic groups.
The project leader is Andrew Aitken of NIESR, with NIESR colleagues (Ana Rincon-Aznar, Larissa Marioni and Elena Lisauskaite) and with Birkbeck colleagues (Sandeep Kapur, Ron Smith & Walter Berkert).
June 2020 GDP, Wage and CPI Trackers
This month, our GDP Tracker found that the UK economy looks set to decline by 20 to 25 per cent in the second quarter of 2020, a significantly steeper decline than the first quarter, reflecting the full impact of lockdown measures. According to the ONS estimate published on 12 June, the UK economy contracted by 10.4 per cent in the three months to April, broadly in line with what we forecast last month. Read more here.
Our Wage Trackerthis month found that the first signs of the COVID-19 impact on the labour market are fewer vacancies, more universal credit claims and lower pay growth. We estimate that nominal earnings growth including bonuses will be negative at -1.1 per cent in the second quarter of 2020 as the downward trend on earnings growth persists in May and June 2020. Read more here.
Our June CPI Tracker found that underlying inflation increased by 0.2 percentage points to 1.2 per cent in the year to May 2020, as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes. The historical relationship between current trimmed mean inflation and future CPI inflation implies CPI inflation above 2 per cent in the year to May 2021. Read more here.
In addition to our CPI Tracker analysis, Huw Dixon (NIESR Fellow) has produced analysis using the new methodology outlined by ONS 2020 for dealing with the effects of the coronavirus that uses lockdown expenditure weights. Read more here.
Our trackers are an invaluable tool during these uncertain times. We acknowledge that forecasting is subject to errors, and so is a hazardous exercise. However, that does not by itself invalidate the exercise because both the producers and consumers of forecasts understand that errors will occur. Forecasting allows us to think about possible futures and plan accordingly.
New Partnership Opportunities
NIESR has recently won new funding from the government-sponsored ''Business Boost'' scheme, which supports our early career researchers to better understand commercial issues. This can be used to support partnerships, training and project work. Together with our funding from the ESRC Impact Acceleration Account, this means that we are better placed than ever to collaborate with partners in business and government. Please do contact John Kirkland (j.kirkland@niesr.ac.uk) or Shane Conneely (s.conneely@niesr.ac.uk) if you have any ideas for how we could work together!
Latest NIESR Op-Eds
"Coronavirus queues are giving Britons a lesson in simple economics", 18 June, The Independent, by Jagjit Chadha
The public are being taught about the command economy - where the government, rather than the market, determines what goods should be produced.
"How universities can embrace the post-Covid future", 19 June, The New Statesman, by Peter Dolton
By implementing long-overdue reforms, the higher education sector has a strong chance of surviving the crisis, and being stronger for it.
Geoff Mason
The Institute was saddened to learn this week of the death of Geoff Mason, who pioneered much of our work on education and employment policy for some 25 years until his departure in 2016. Even following his ''retirement'' Geoff continued to be active as a Fellow both here at the Institute, and at UCL.
NIESR Alumni
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National Institute of Economic and Social Research's Wage Tracker
Figure 1
- Average weekly earnings growth (per cent per annum)
1 -
Average weekly earnings growth (per cent per annum
Main points
?According to new ONS statistics published this morning, average weekly earnings, excluding bonuses, grew at an annual rate of 0.7 per cent
in the three months to May, or around zero in real terms.
?More up to data information from HMRC's real time information indicates that median pay rose by ?32 per month in June after falling in the
previous two months, partly as a result of fewer lower paid employees joining the workforce. Employment fell by 760 thousand between February and June.
?There is a recent disparity between pay growth in the public and private sectors. Regular annual pay growth was zero in the private sector
and 3.7 per cent in the public sector in the three months to May. The difference partly reflects greater use of furloughing in the private sector.
?Earnings are being affected by furloughing, with over half of furloughed employees receiving
80 per cent of their normal pay (up to ?2,500 per month).
?Average weekly earnings, excluding bonuses, are set to rise by 0.3 per cent in the second quarter and pick up by 1.0 per cent in the third
quarter as furloughed workers return to work and some lower paid workers become unemployed.
Garry Young, NIESR Deputy Director, said: "Pay growth in the private sector has fallen, but may flatten off for a time
as workers return from furlough before weakening further in the second half of the year when unemployment is set to rise sharply."
For further information please contactthe NIESR Press Office: press@niesr.ac.uk
/ 07930 544631 / l.pieri@niesr.ac.uk
National Institute of Economic and Social Research
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National Institute of Economic and Social Research’s Wage Tracker
2020 shaping up to be the worst year for total pay growth since 2009
Figure 1 – Average
weekly earnings including bonuses, annual growth (ONS)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to ONS statistics published this morning, average weekly earnings, including bonuses (AWE), were 2.7 per cent in the three months to October and
1.9 per cent in real terms in Great Britain.
Average pay growth was largest in the finance and businesses sector at 4.6 per cent and lowest in the construction sector at -2.2 per cent.
The recently announced pay freeze for half of public sector workers will reduce the growth rate of public sector pay that has been growing
faster than private sector pay since the beginning of the pandemic.
The November lockdown in England and continued uncertainty regarding the pandemic has put downward pressure on private sector pay as the
number of furloughed workers probably increased for the first time since April.
The National Living Wage will increase by 2.2 per cent to ?8.91 an hour from April 2021 in line with the Low Pay Commission’s recommendation.
We forecast average weekly earnings including bonuses to increase by 1.0 per cent in the fourth quarter of 2020.
Cyrille Leno?l, NIESR Senior Economist, said: “2020 will
probably end up being the worst year for total pay growth since 2009. Pay freeze for a large part of the labour force, in addition to lost income during the time spent in furlough have put more strain on the labour market than the modest rise in unemployment
suggests. Even with rollout of an effective COVID-19 vaccine, the recovery in the labour market will take time.”
For further information please contact the NIESR Press Office the NIESR Press Office
press@niesr.ac.ukor Luca Pieri onl.pieri@niesr.ac.uk
/ 07930 544 631
National Institute of Economic and Social Research
2 Dean Trench Street
Smith Square
London, SW1P 3HE
United Kingdom
Switchboard Telephone Number: 020 7222 7665
Website:
http://www.niesr.ac.uk
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
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National Institute of Economic and Social Research’s
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
The morning’s ONS estimates suggest that the UK economy grew by 0.4 per cent in October, as the economic recovery from the early stages of Covid-19
slowed. This is largely in line with what we expected in our November GDP Tracker.
Based on survey data for November and NIESR judgement we estimate that economic activity fell by some 9.3 per cent: as expected, a
smaller drop than during the full lockdown in Spring 2020.
Our outlook for the fourth quarter is for a 1.5 per cent decline in activity, following 9.7 per cent month-on-month growth in December.
We now expect the level of GDP at the end of the 2020 to be some 8.5 per cent lower than it was at the end of 2019.
Rory Macqueen, Principal Economist - Macroeconomic Modelling and Forecasting,
said:“Today’s ONS data show that the fourth quarter got off to a ponderous start even before the second lockdown in England was imposed. Survey data suggest that although the economic impact
of the second lockdown in November was smaller than the first, it does seem more likely than not that the final quarter of the year will show little or no overall growth in GDP with the recovery shuddering to a halt. While the rollout of the vaccine offers
some positive momentum, the final act of Brexit is likely to offset that in the early months of 2021.”
Please find the full analysis in the document attached
For more information please contact Luca Pieri on
press@niesr.ac.uk/l.pieri@niesr.ac.uk / 07930 544 631
Kind Regards,
The Comms Team
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Check out our COVID-19 Research Page
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
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National Institute of Economic and Social Research’s
GDPTracker
UK economy on rocky road to recovery with growth forecast of around
2 per cent in August
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
·Latest ONS estimates published this morning show that the UK economy contracted by 7.6 per cent in the three months to July, largely
in line with what we had forecast last month (figure 1).
·The estimates also suggest that the economy grew by 6.6 per cent in July itself, marking a third consecutive monthly increase.
·Despite this recovery, the economy has still only recovered just over half of the lost output caused by the national lockdown.
·All the main sectors of the economy remain below pre-crisis levels. However, improvements have been seen in manufacturing and agriculture,
but services and production remain sluggish.
·Taking account of the latest ONS estimates, we forecast GDP to grow by about 7 per cent in the three months to August and
expect to see growth of around 15 per cent in the third quarter of 2020.
Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting, said:“There has been a welcome resumption of economic growth in the third quarter as the lockdown
eased, signalling the end of a short, yet severe, recession in the first half of the year. The latest ONS estimates suggest that GDP grew by 6.6 per cent in July, a third consecutive monthly increase and is now 18.6 per cent higher than its April level. However,
despite this recovery, we have still only recovered just over half of the output lost due to the Covid-19 pandemic. The evolution of the pandemic and the scale of expected withdrawals of government support pose downside risks on the pace of the recovery as
we move to the end of this terrible year.”
Please find the full analysis in the document attached
For more information please contact Chloe Ridyard or Luca Pieri on
press@niesr.ac.uk/c.ridyard@niesr.ac.uk /
l.pieri@niesr.ac.uk / 07930 544 631
Kind Regards,
The Comms Team
----------------------------------
Check out our COVID-19 Research Page
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
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NIESR Newsletter - 3 September 2020
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National Institute of Economic and Social Research
Newsletter - 3 September 2020
Welcome to NIESR's newsletter, a monthly catch-up with our activities. Authoritative and independent analysis has never been more needed than now - and we''re here to help.
NIESR is always open to research and partnership suggestions. Please get in touch if we can work together in any way.
NIESR Welcomes Major New Productivity Institute
The announcement on Friday 21 August of a major new initiative to address Britain's long-standing productivity puzzle was welcomed by NIESR.
NIESR is a member of the core team directing the new Productivity Institute, which will be hosted at the Alliance Manchester Business School, and be funded to the tune of ?32 million, including ?26 million from the Economic and Social Research Council (ESRC), over five years. The ESRC is part of UK Research and Innovation, which is funded principally by the Department for Business, Energy and Industrial Strategy (BEIS). Other partner institutions in this new initiative are the Universities of Cambridge, Sheffield, Cardiff and Warwick, together with King's College London and Queen's University Belfast. Full details of the announcement can be accessed here.
The involvement reflects NIESR's significant contribution to productivity research, which over several decades has involved ground-breaking work on productivity measurement, international comparisons and the link between productivity and education.
NIESR will contribute to the new Institute by hosting a major strand of work on macroeconomics, led by Professor Jagjit Chadha and co-hosting the theme on governance, under the leadership of Professor Adrian Pabst. The Economic Statistics Centre of Excellence, a research centre supported by the Office for National Statistics and hosted by NIESR, will lead a theme on the measurement of productivity under the direction of Rebecca Riley. Three other NIESR staff - Dr Claudine Bowyer-Crane, Ana Rincon-Aznar and Dr David Nguyen, will also lead work packages in the strongly inter-disciplinary initiative.
READ THE FULL PRESS RELEASE HERE
NIESR Appoints Two New Deputy Directors
The National Institute of Economic and Social Research is pleased to announce the appointment of Dr Hande Kucuk and Prof Adrian Pabst as the Institute''s Deputy Directors.
Dr Hande Kucuk has been appointed as Deputy Director for Macroeconomics, Modelling and Forecasting. She will be taking the reins from Dr Garry Young, who is retiring from the role but will stay on at NIESR. Dr Kucuk holds a PhD in Economics from the London School of Economics and previously worked as Deputy Director at the Central Bank of Turkey in the Research and Monetary Policy Department. She has extensive experience in central banking in emerging market economies, policy analysis, macroeconomic modelling and forecasting. Dr Kucuk has published research on topics in international macroeconomics and finance and applied macroeconomics.
Prof Adrian Pabst joins the Institute as Deputy Director for Social and Political Economy from the University of Kent, where he is currently Professor of Politics. His research is at the interface of political theory, political economy and public policy. Prof Pabst will lead the Institute''s research on social and political economy, with a focus on economic populism, the interaction between states, markets and civic institutions as well as questions of relational prosperity and human flourishing.
READ THE FULL PRESS RELEASE HERE
GDP Picking Up After Recession Confirmed
Following the latest ONS estimates published that showed that the UK economy contracted by 20.4 per cent in the second quarter of 2020, thereby confirming the UK's first recession since the global financial crisis, we released our monthly GDP Tracker on Wednesday 12th August. Our tracker predicts that the outlook for the third quarter of 2020 is for growth of about 15 per cent as the economy reopens, on the assumption that Covid-19 remains contained. This would still leave GDP in September around 10 per cent lower than in February. Read the full tracker here.
We also released our Wage Tracker this month (11 August), which predicts that average earnings are expected to recover slightly in the short term as employees return from furlough, with average earnings excluding bonuses forecast to grow at an annual rate of 0.2 per cent in the three months to September. Read the full tracker here.
Our monthly trackers are created using NiGEM, the leading global macroeconomic model used by both policy makers and the private sector across the globe for economic forecasting, scenario and simulation purposes. NiGEM is available for licence and specific modelling tasks for external users.
New Project: Supervision of DSLs in Schools Scale-Up Evaluation
Following on from an initial evaluation exploring the impact of providing formal, individual supervision to Designated Safeguarding Leads (DSLs) in primary schools in Bolton, this programme is now being scaled up to run in secondary schools in the Greater Manchester area. The funders are What Works for Children''s Social Care. The intervention aims to improve knowledge and understanding of Children's Social Care processes and issues, resulting in reductions in inappropriate contacts to Children's Social Care, and reducing DSL stress and anxiety.
NIESR ran the initial evaluation and has now been awarded the grant to run the evaluation of the scale-up, which will comprise an impact evaluation along with an implementation and process evaluation and analysis of costs.
The project is being led by Lucy Stokes with Chiara Manzoni and Johnny Runge co-leading the implementation and process evaluation. Claudine Bowyer-Crane, Elena Lisauskaite are also working on this project with Professor Richard Dorsett from the University of Westminster (and NIESR Fellow) as an expert advisor to the team.
Upcoming Events
ESCoE Conference on Economic Measurement 2020
The Economic Statistics Centre of Excellence (ESCoE) will now hold its annual conference, organised in partnership with the UK Office for National Statistics (ONS), on 16-18 September 2020. Due to Covid-19 the conference is taking place digitally using a virtual platform. ESCoE is an ONS supported initiative hosted by NIESR.
Registration is now open. Please click here to view the conference programme and to register.
Supporting Language and Communication Skills in the Early Years
A growing number of children are starting school with poor language skills. How can organisations support early language development? This seminar will draw on our work for Better Start Bradford to discuss how to bridge the gap between research and practice and ensure high-quality support for children. We will talk about the programmes we introduced to support children's language development; some of the challenges we faced in evaluating these programmes and how we tackled these; and how the programmes were adapted in response to COVID 19. Throughout the webinar there will be opportunities to ask questions, engage in discussion and share practice.
We will run three identical sessions of the workshop, taking place on 30 September (9am-11:30am), 21 October (1pm-3:30pm) and 11 November (9am-11:30am).
Find out more and register your interest here.
Further Reading
And there's more .! Our NIESR staff and Fellows have been widely contributing to the policy debate during the past few weeks. Further examples of our work can be found at the links below.
"Economics in a Public Health Crisis", 2 September, article in the Summer 2020 Science in Parliament Journal by Jagjit Chadha
"The Lockdown Weighted Inflation CPILW For July 2020 And The Prospects For Inflation", 19 August, NIESR blog by Huw Dixon
"Book notes: Radical uncertainty, by Mervyn King and John Kay", 14 August, book review in Central Banking by Jagjit Chadha
"I miss the honey lady": How one resident helped her community to understand what is truly valuable", 14 August, Prospect, Jagjit Chadha
"How to tame the tech giants", 12 August, Prospect, Adrian Pabst
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National Institute of Economic and Social Research's Wage Tracker
Private Sector Pay To Decline Further in Q3 As Employment Falls
Figure 1
- Public and private pay growth (per cent per annum)
1 -
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, average weekly earnings, including bonuses, declined at an annual rate of 1 per cent in the three months to July,
or 1.8 per cent in real terms.
The construction sector was worst hit with pay growth declining by 7.5 per cent while public sector pay growth is at the highest since 2006 at 4.5 per cent.
We forecast August and September earnings to fall compared to July as demand for labour declines consistent with our unemployment forecast of 5.8 per cent for the third
quarter. On average, weekly earnings including bonuses would decline by 0.8 per cent in the third quarter compared to a year ago and by 1.6 per cent in real terms.
Cyrille Leno?l, NIESR Senior Economist, said: "The UK labour market is entering a very difficult phase with unemployment going up and wages declining in the private sector. As the effect of the
pandemic lingers on, more government support may be required to prevent the long-term scarring from a surge in unemployment."
For further information please contact the NIESR Press Office the NIESR Press Office
press@niesr.ac.ukor Luca Pieri onl.pieri@niesr.ac.uk
/ 07930 544 631
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National Institute of Economic and Social Research’s
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
Latest ONS estimates published this morning show that the UK economy grew by15 ? per cent in the third quarter of 2020, as the economy recovered from
the first phase of the Covid-19 pandemic and resultant public health measures. This is largely in line with what we expected last month and with our recent forecast in our November Review.
Monthly estimates suggest that growth in September itself was 1.1 per cent, meaning that GDP at the end of the quarter was still 8.2
per cent below its pre-pandemic February level.
Our outlook for the fourth quarter is for 2.2 per cent decline in growth. We expect growth to be 0.3 per cent in October. The second
lockdown is expected to bring a monthly fall of about 12 per cent in November in line with our previous estimates on the impact of the November lockdown.
Our forecasts assume a return to October levels of activity in December: in other words, we expect a rapid rebound following the end
of the second lockdown. Accordingly, our forecast for 2020 stand at –11.3 percent.
There are downside risks if the lockdown is extended or does not succeed in bringing down infection rates, while upside
risks would come from a smaller than anticipated fall in November as households switch to online consumption ahead of the holiday season.
Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting,
said:“Today’s ONS data suggest that the recovery from the first phase of the pandemic was already slowing by the end of the third quarter,
with output remaining 8.2 per cent below pre-pandemic levels in September. Growth in the fourth quarter will be much slower than in the third quarter and is likely to turn negative, due to weaker growth in October and a second lockdown from November. Our expectations
for the fourth quarter and beyond will depend on the stringency and duration of ongoing lockdowns; local and national.”
Dr Hande K???k, Deputy Director - Macroeconomic Modelling and Forecasting, said: “We expect the second lockdown to
bring a large monthly contraction in November to be followed by a quick rebound in December provided that the lockdown succeeds in getting infection rates under control without the need for a further extension. The UK economy is likely to contract by around
11.5 percent in 2020.”
Please find the full analysis in the document attached
For more information please contact Luca Pieri on
press@niesr.ac.uk/l.pieri@niesr.ac.uk / 07930 544 631
Kind Regards,
The Comms Team
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Check out our COVID-19 Research Page
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National Institute of Economic and Social Research's
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
The ONS preliminary estimates suggest that growth declined by 2.0 per cent in the first quarter of 2020, broadly
consistent with what we suggested it could be last month (figure1.)
The substantive contraction in growth reflects negative contributions across all the headline
sectors.
Output declined by 5.8 per cent in March itself, mainly due to record falls in construction
and services.
The latest ONS estimates are preliminary and largely uncertain but continues to suggest GDP
is around 25 per cent smaller when the lockdown is in place.
In light of the preliminary release, we forecast growth in the second quarter to decline sharply
by about 25 to 30 per cent.
Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting, said:"In a period of radical uncertainty, the short-term economic impact of Covid-19 is becoming clearer with the publication of GDP data for March, where output is expected to be lower by
about 25 per cent in months when the lockdown is in place. Restarting the economy by promoting activities in upstream sectors such as construction, some manufacturing and the government will increase overall activities via helpful spillovers. But without
a vaccine, there is significant risk of a second wave which could trigger a further setback in the economy."
Please find the full analysis in the document attached
For more information please contact Luca Pieri on
l.pieri@niesr.ac.uk /
Chloe Ridyard c.ridyard@niesr.ac.uk
/ 079 305 44631
Kind Regards,
The Comms Team
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Check out our COVID-19 Research Page
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National Institute of Economic and Social Research's
GDPTracker
UK remains on course for 0.2% growth in 2020Q1, but outbreak of the coronavirus
poses a major threat to the economic outlook
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
The UK economy remains on course to grow by 0.2% in first quarter of 2020 (figure1.)
According to new ONS statistics published this morning, the UK economy expanded by 0.0 per cent
in the three months to January, consistent with what we had forecast last month.
Output also stagnated in January itself, with services growth being offset by declines in production
and construction.
Dr
Kemar Whyte, Senior Economist - Macroeconomic
Modelling and Forecasting, said:"Economic activity in the UK appears to have been picking up at the beginning of the year. But the outbreak of the Coronavirus poses a major threat
to the economic outlook. With supply chain headwinds now arising as a result of the outbreak, there are substantial downside risks to the near-term outlook."
Please find the full analysis in the document attached
For more information please contact Luca Pieri on
l.pieri@niesr.ac.uk/ Phil Thornton on p.thornton@niesr.ac.uk /
Chloe Ridyard c.ridyard@niesr.ac.uk
/ 0207 654 1954 or 079 305 44631
Kind Regards,
The Comms Team
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Check out our General Election 2019 Analysis
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National Institute of Economic and Social Research’s
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
Latest ONS estimates published this morning show that the UK economy contracted by 20.4
per cent in the second quarter of 2020, thereby confirming the UK’s first recession since the global financial crisis. This outturn is largely in line with what we had forecast last month (figure 1).
Further estimates suggest that the economy grew by 8.7 per cent in June
itself.
The outlook for the third quarter of 2020 is for growth of about 15 per
cent as the economy reopens, on the assumption that Covid-19 remains contained. This would still leave GDP in September around 10 per cent lower than in February.
Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting, said:“Today’s ONS estimates suggest that GDP fell by a record 20.4 per cent in the second quarter of 2020, following a decline of 2.2 per cent in the first quarter of the year, thereby confirming
the UK’s first recession since the financial crash. However, the monthly estimate for June suggests a rebound of 8.7 per cent, reflecting further easing of Covid-19 lockdown measures – though it remains a sixth below its level in February. Despite the recovery
noted in June, the path ahead remains precarious. An extended period of growth will be required to make up the ground lost in recent months”
Please find the full analysis in the document attached
For more information please contact Chloe Ridyard on
c.ridyard@niesr.ac.uk /
press@niesr.ac.uk/ 07970984913
Kind Regards,
The Comms Team
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Check out our COVID-19 Research Page
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National Institute of Economic and Social Research’s Wage Tracker
Figure 1 – Average
weekly earnings growth (per cent per annum)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, average weekly earnings, excluding bonuses, grew at an annual rate of -0.2 per cent in the three months to June, a fall of
0.8 per cent in real terms. When bonuses are included, total pay fell at an annual rate of 1.2 per cent in the three months to June.
More up to data information from HMRC’s real time information indicates that median pay rose by ?34 per month in July and was now ?75 higher than the trough in April. Employment
fell by 740 thousand between February and July.
There continues to be a disparity between pay growth in the public and private sectors. Regular annual pay growth fell by 1.2 per cent in the private sector and rose by 4.1 per
cent in the public sector in the three months to June. The difference partly reflects greater use of furloughing in the private sector.
Average earnings are expected to recover slightly in the short term as employees return from furlough, with average earnings excluding bonuses forecast to grow at an annual rate
of 0.2 per cent in the three months to September.
Garry Young, NIESR Deputy Director, said: “Average pay in the private sector levelled off in May and June after falling sharply in March and April. It will pick up in the short term as workers return from
furlough. But pay will weaken again in the second half of the year when unemployment is set to rise sharply.”
For further information please contactthe NIESR Press Office: press@niesr.ac.uk /
07970984913 /
c.ridyard@niesr.ac.uk
National Institute of Economic and Social Research
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Smith Square
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United Kingdom
Switchboard Telephone Number: 020 7222 7665
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NIESR April 2020 Newsletter
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National Institute of Economic and Social Research
Newsletter - April 2020
Welcome to NIESR's newsletter, a regular catch-up with our activities and preview of the coming weeks.
NIESR has followed government advice regarding the global pandemic. We are all working from home, and face-to-face events at the Institute are postponed until June at least. Other than that, it''s business as usual! Authoritative and independent analysis has never been more needed than now - and we''re here to help. Please get in touch if we can work together in any way...
Economic Crisis: Covid-19
Our excellent networks, state of the art modelling, cross disciplinary research and economic measurement makes NIESR ideally placed to lead debate on the social and economic impact of the Coronavirus. We have started to publish a range of perspective from our staff and partners, and will continue to do so over the coming weeks. We have collated the research on our website here, and will continue to update this page.
New Projects
March was a busy and exciting month for NIESR, as we were awarded the following projects: Good recruitment for older workers - understanding individuals' recruitment experience, funded by Centre for Ageing Better; Investigating the factors driving Scotland's productivity gap with other countries, funded by the Scottish Government; Statistical modelling of bilateral trade flows, funded by the Department for International Trade; Low Pay Commission (LPC): Open call - Minimum wages and technology adoption, funded by LPC/ UK SBS and Macroeconomic modelling of recession planning scenarios, funded by the Joseph Rowntree Foundation.
We are very much open to discussing how we can partner with other like-minded institutions and form collaborations at this time, as we try to understand what this event means for our way of life.
As you may know, NIESR is a recipient of the prestigious Impact Acceleration Account from the ESRC. This grant provides us with dedicated funding to further our reach and maximise the impact of our research; including through external partnerships. If you would like to hear more about how you can partner with NIESR, whether through the IAA or otherwise, please do get in touch.
Get in touch
We are Delighted to Welcome
Professor Adrian Pabst and Dr Claudine Bowyer-Crane to NIESR
Professor Adrian Pabst has joined NIESR as Deputy Director for Social and Political Economy. Adrian is one of two Deputy Directors at NIESR. His research is at the interface of political theory, political economy and public policy. He has a particular interest in the interaction between traditions of political economy, contemporary politics and fiscal policy. Find out more about Adrian here.
Dr Claudine Bowyer-Crane has joined NIESR as Associate Research Director for Employment and Social Policy. Claudine is the Associate Research Director for the Employment and Social Policy team. She is a Psychologist, whose research focuses primarily on designing and evaluating early interventions to support children's language development. She also carries out research to support the educational achievement of children who speak English as an Additional Language.Find out more about Claudine here.
NIESR-OMFIF Webinar: Assessing the Economic Impact of Coronavirus
On Tuesday 7 April, OMFIF held a virtual roundtable ''Assessing the economic impact of coronavirus'' with Garry Young (Director of Macroeconomic Modelling and Forecasting at NIESR) and Jagjit Chadha (Director of NIESR):
As uncertainty continues over the economic impact of coronavirus on the global economy, the National Institute of Economic and Social Research examines the potential ramifications, using stylised scenarios based on the National Institute's Global Econometric Model. Two architects of NIESR's most recent report join OMFIF in presenting their findings. They specifically focus on the different channels of impact including through the labour market, consumers' expenditure and investment, higher uncertainty and a temporary shutdown in some sectors. Not accounting for substantial policy responses, the underlying impact on global GDP growth is likely to be at least as large in magnitude as the 2008 financial crisis.
Latest NIESR Blogs
"The case for supporting high quality home learning environments made stronger by COVID-19" by Claudine Bowyer-Crane
In the wake of Covid-19 related nursery and school closures, the quality of the home learning environment is more important than ever. We know that very young children depend on high quality interaction to support their cognitive, language, social and emotional development and the current crisis only serves to emphasise the need for good quality programmes that support families in providing the best start for their children.
"The Economy on Ice: Preventing Economic Contagion" by Spiros Bougheas
The COVID-19 pandemic is not only a health crisis. The confinement of people to their homes has profound effects on the economy. As economic activity slows down many firms find it impossible to meet their obligations to their suppliers, creditors, landlords and workers. Unless, they receive financial assistance will collapse into administration.
Discussion Papers
"The Fed's enhanced swap lines and new interventions in the Treasury market" by William A Allen and Richhild Moessner
In March 2020, the Federal Reserve enhanced its existing swap lines with foreign central banks, and introduced additional temporary swap lines with other central banks, in order to support the smooth functioning of U.S. dollar funding markets during the coronavirus epidemic. The Federal Reserve also announced purchases of US Treasuries and agency mortgage bonds in order to support the smooth functioning of the Treasury and mortgage-backed securities market. We analyse the motivations for and the effects of these measures.
"Brexit and the Euro" by Nauro F Campos and Corrado Macchiarelli
The year 2019 marked the 20th anniversary of the establishment of the Euro. It was also the last full year before the UK formally left the European Union. This paper examines the relationship between the UK and the euro area.
Read more NIESR publications here
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National Institute of Economic and Social Research’s Wage Tracker
Figure 1 – Average weekly earnings growth (per cent per annum)
1 –
Average weekly earnings growth (per cent per annum
Main points
According to new ONS statistics published this morning, UK average weekly earnings expanded by 2.9 per cent excluding bonuses in the three months to February 2020 compared
to the year before, and by 2.8 per cent if bonus payments are taken into account.
The Wage Tracker indicates that nominal earnings growth including bonuses will be 2.9 per cent in the first quarter of 2020, decreasing to 2.3 per cent in the second quarter.
Cyrille Lenoel, Senior Economist at NIESR, said: “UK earnings growth, which had already declined from 4 per cent in the middle of 2019 to below 3 per cent in the three months to February 2020, will most
likely decelerate further in the next few months because of the rise in furloughing and the reduction in economic activity during the Covid19-related lockdown period.”
The National Institute of Economic and Social Research is a company registered in England and Wales (company number 00341010) and a charity registered
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This email and any attachments are confidential and intended for the addressee only. If you are not the intended recipient you must take no action based on them, nor must you copy or show them to anyone. Please contact the sender if you believe you have received
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NIESR Newsletter - 6 August 2020
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National Institute of Economic and Social Research
Newsletter - 6 August 2020
Welcome to NIESR's newsletter, a regular catch-up with our activities. Authoritative and independent analysis has never been more needed than now - and we''re here to help.
NIESR is always open to research and partnership suggestions. Please get in touch if we can work together in any way.
'Premature' End to Furlough to Push Jobless Rate to 10%
National Institute Economic Review August 2020 Online Press Conference
The UK economic forecast in our August National Institute Economic Review suggests that unemployment could rise to almost 10% of the workforce by the end of the year, following the end of the government furlough scheme in October, but will recede. It will recede as the recovery gathers speed in 2021, but remain above its recent level of 4 per cent.
We argue that unemployment would have stayed lower had the government extended the furlough scheme beyond October. This would have been a relatively inexpensive measure, and by preventing a rise in long-term unemployment might have paid for itself.
For more details of our analysis, please see the comments of our Director, Jagjit Chada, to the media conference launching the forecast. Our UK and world economic forecasts in the review are created using NiGEM, the leading global macroeconomic model used by both policy makers and the private sector across the globe for economic forecasting, scenario and simulation purposes. NiGEM is available for licence and specific modelling tasks for external users.
VIEW THE FULL REVIEW FOR FREE HERE
Revisiting Regional Challenges
Our August Review also focuses on regional or spatial inequalities that are the heart of the UK Government's "levelling up" agenda, in the context of the economic disruptions created by Brexit and Covid-19.
Without adequate policy intervention, both are likely to worsen spatial disparities in the UK even further. For example, regional gross disposable income per person in London is around 1.7 times higher than in the North East, Wales or Northern Ireland.
You can read more on this topic in the introduction to the review, and in the following articles:
COVID-19 impacts on destitution in the UK
Reconciled estimates and nowcasts of regional output in the UK
Regional disparities in labour productivity and the role of capital stock
UK interregional inequality in a historical and international comparative context
Understanding regional economic performance and resilience in the UK: trends since the global financial crisis
China and Global Trade
The first report in our new 'global landscapes' series focusses on "China and the United Kingdom: Economic Relationships". The report is written by Bill Allen, Jagjit Chadha, Amit Kara, Xuxin Mao, Adrian Pabst, David Nguyen, Philip Turner and Lei Xu.
The report includes our simulations of a 'China shock' - a sustained 6% fall in demand in China - that suggests that the impact on the UK might be about 1% of GDP, perhaps lasting for several years. Simulation of a trade war between the USA and China suggest that the effect on UK GDP would be modest. Restrictions on trade between the UK and China - a possible outcome of the Huawei debate - would depress GDP and put upward pressure on inflation, so that interest rates would increase.
VIEW THE FULL REPORT HERE
Bringing Research to a Wider Audience
In conversation with Mervyn King: radical uncertainty, coronavirus, and economic policy
NIESR is playing a leading role in the ESRC-funded Economics Observatory, a national initiative by the economic research community to answer questions from policy-makers and the public about the economics of the Covid-19 crisis and the recovery, with several NIESR staff answering some of the key questions on the issues.
As part of the initiative, Jagjit Chadha recently interviewed former Governor of the Bank of England Mervyn King to discuss radical uncertainty, Coronavirus and economic policy. The full interview can be viewed above.
Further Reading
And there's more .! Our NIESR staff and Fellows have been widely contributing to the policy debate during the past few weeks. Further examples of our work can be found at the links below.
"The Impact of Covid-19 on the UK Jobs Market" NIESR blog by Andrew Benito
"Measuring inflation in the pandemic - June 2020" NIESR blog by Huw Dixon
"Failure to tackle digital skills divide will worsen regional inequality" NIESR blog by David Nguyen
"Household spending in lockdown" NIESR blog by Dawn Holland
"The importance of alternative data sources", ESCoE and NIESR blog by Janine Boshoff
"Robust public policies will determine the economic outlook for the UK", 29 July, Op-Ed in Prospect Magazine by Jagjit Chadha
GET IN TOUCH WITH NIESR
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National Institute of Economic and Social Research's
GDPTracker
Figure 1 -
UK GDP growth (3 months on previous 3 months, per cent)
Main points
?The UK economy looks set to decline by 20 to 25 per centin the second quarter of 2020, a significantly steeper decline than the first quarter, reflecting the full impact of lockdown measures.
?According to the ONS estimate published this morning, the UK economy contracted by 10.4 per cent in the three months to April, broadly in line
with what we forecast last month (figure 1).
?The contraction in growth reflects negative contributions across all the sectors.
The May easing of the lockdown, suggests that April might have marked the trough in activity.
Dr Kemar Whyte, Senior Economist - Macroeconomic Modelling and Forecasting, said:"As we have suggested,
around a quarter of GDP is lost when the lockdown is fully in place. The latest ONS estimate represents a record monthly decline for UK GDP, with all sectors experiencing record falls. However, the economy
now appears to have bottomed out, as recent survey evidence suggests an easing in the rate of contraction in the manufacturing and services sector. The re-opening of non-essential stores from 15 June, coupled with the government's continued support should
aid a gradual, albeit limited, recovery in domestic activity."
Please find the full analysis in the document attached
For more information please contact Luca Pieri on
l.pieri@niesr.ac.uk /
Chloe Ridyard c.ridyard@niesr.ac.uk
/ 079 305 44631
Kind Regards,
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