Spring 2024 Newsletter


After the cost-of-living crisis, what next? The last four years have been dominated by the Covid pandemic and the cost-of-living crisis. We have seen global supply-chain disruptions and inflation reach levels last seen in the 1970s, requiring sharp increases in interest rates. These challenges seem to be abating, with policymakers increasingly confident that we can avoid a prolonged recession or deeper crash. In the absence of another major shock, what comes next though?

Orchestrating a ‘soft landing’ is not the same as just returning to how it used to be before the Covid pandemic. For a start, while some prices may go back to former levels, many won’t – we won’t likely see falling prices or deflation across the board. The UK labour market is different with higher inactivity rates than pre-Covid (people of working age but not working or actively looking for work), while government debt levels are significantly higher than they used to be. In its latest assessment, the International Monetary Fund therefore urges governments to focus on fiscal consolidation – debt levels and deficits (borrowing) are too high. But is this viable policy advice given the climate crisis and heightened geopolitical tensions? What choices would a government make?

Next spending review and public sector productivity In the UK, the government will set out its spending priorities in the next spending review. Expected soon after the general election (as spending allocations run out in 2025) there will be tough choices to make. Any spending review would be easier if the UK economy could return to solid growth and improve public sector productivity. In his March 2024 Budget, Chancellor Jeremy Hunt noted that public service productivity is estimated by the Office for National Statistics to be 5.9% below pre-pandemic levels. Good news is that Stephen Aldridge, Chief Analyst at the Department for Levelling Up Communities and Housing, has already suggested a list of eight actions to promote public service productivity here.

Budget 2024 Talking of Jeremy Hunt, it feels like a long time since he presented the 2024 Spring Budget though it was only in March. For a more in depth discussion about the forecasts and assumptions behind the Budget you can watch Catherine Connolly’s interview with Tom Josephs and Steve Farrington of the Office for Budget Responsibility see: OBR Post Budget Briefing.

The role of government and re-nationalisation The Labour Party has just come out in favour of re-nationalisation of the railways should they win the next general election. Notably, changes to the way railways are regulated do not seem to be an option. Looking at the mess Thames Water is finding itself in currently, they might have a point. How does a regulated utility end up with a huge debt pile, potentially requiring a government bail-out? For an interesting discussion on the economics of water and the role of regulators, we suggest looking at Dieter Helm’s latest commentary here. Clearly, getting the right balance between responsibilities and financial incentives is difficult, let’s hope improved governance structures would prevent a similar case from happening in the future.

New Course – Wellbeing in Appraisal This summer we launch a new course led by Sara MacLennan who authored the Green Book supplementary guidance on Wellbeing. This one-day course will cover all the basics of how to use Wellbeing in cost-benefit and cost-effectiveness analysis. Wellbeing analysis is a fascinating aspect of economics and relevant to policy making, with economist Lord Richard Layard, for example, suggesting that government departments should consider wellbeing when making funding bids in the next spending review.

Upcoming events and courses

Courses are delivered both online and in person. SPE Courses are run for professional analysts by economicsense on behalf of the Society of Professional Economists.

Economics for non-economists 9:30am-12pm, 11, 12, 13 June 2024 This course is aimed at everyone who wants to have a better understanding of economics. It is particularly useful for government analysts (outside economics), policy and finance professionals and non-economists in consultancies, think tanks or charities. It does not require any prior knowledge of economics or mathematics. To book: Economics for non-economists

SPE Courses

SPE Course: Introduction to Wellbeing in Appraisal 9.30am–5pm, 3 June 2024 This course focuses on a recent addition to appraisal – wellbeing analysis. This course provides an introduction to wellbeing in appraisal, in particular for use in cost-benefit and cost-effectiveness analysis. Participants will be shown how to use wellbeing evidence in accordance with latest supplementary Green Book guidance. The course will be delivered by Sara MacLennan. Sara is a Visiting Research Fellow at the London School of Economics, working in the Centre for Economic Performance on the Wellbeing Value for Money of Government policies. To book: Introduction to Wellbeing in Appraisal

Introduction to Python 9.30am–4.30pm 9-10 July 2024 This course introduces Python, one of the world’s most versatile and fastest-growing programming languages. It is aimed at professionals using data analysis as part of their work, be it economists, financial professionals, or statisticians. This course is delivered in person by Dr. Paul Wohlfahrt at Mary Sumner House, London SW1P 3RB. To book: Introduction to Python

Introduction to R 9.30am–4.30pm, 11–12 July 2024 This course introduces the popular programming language R. R offers the most comprehensive toolkit available in statistical programming, making it ideal for in-depth data analysis. The course shows how to use R to manage data and analyse cross-sectional, time-series and panel data sets. This course is delivered in person by Dr. Paul Wohlfahrt at Mary Sumner House, London SW1P 3RB. To book: Introduction to R