With a soft landing in sight what can possibly go wrong? In a world of gloom and doom, we appreciate positive economic news. For example that the likelihood of a hard landing has receded, and a soft landing is now a possibility. A soft landing in economics is essentially where inflation comes down without plunging the economy into a recession. If this turns out to be correct, policymakers could be proud of their achievement of steering the global economy through these turbulent times and combating the cost-of-living crisis. Let us hope though that the economic soft landing will not suffer the same fate as the soft landing of Japan’s Smart Lander for Investigating Moon (SLIM) on the moon. Having achieved the remarkable feat of touching down within a few metres of its planned location (a first), it then toppled over. So close but still so far…
Improving living standards With the cost-of-living crisis gradually easing, economists can at last focus again on what really improves lives: economic growth. Economic growth would make it much easier to address the challenges of the future, from improving health-care services and modernising infrastructure to climate change. There the news is less good, with the UK economy more or less stagnating for a decade and flat lining since the COVID pandemic four years ago.
Waiting for Godot Labour, capital and – most of all – productivity growth are the drivers of economic growth. At the November Treasury Select Committee meeting, Dame Angela Eagle suggested that waiting for productivity growth was like waiting for Godot. To which Andrew Bailey, Governor of the Bank of England, reminds us that Godot never arrived.
Perhaps the next generation can help? Perhaps we just have to wait for the next generation to help us out? The latest Pisa education study published by the OECD in December makes for sober reading though. In the UK and much of the developed western world, educational attainment is declining. What is most worrying is that while the COVID pandemic can be blamed for the dramatic drop between 2018 and 2022 in many countries, the long-term trend is also negative.
AI to the rescue? If human intelligence isn’t improving (or at least our educational attainment isn’t), perhaps artificial intelligence can fill the gap? It has been said that 2023 was the year AI burst into our lives but that it will be 2024 that we will see the first fruits of productivity improvements. Some commentators have suggested that AI could be so transformative that we might see explosive, double-digit growth in the future. Others are not so sure, pointing to the modest historical record of previous technological change.
Back on planet earth The Bank of England forecasts zero growth this year, accelerating to 0.4% in 2025 and then 1.1% in 2026. We will have to wait at least a few more years for Godot.
We wish you a successful 2024.
Upcoming events and courses
Courses are currently delivered both online and in person. SPE Courses are run for professional analysts by economicsense on behalf of the Society of Professional Economists.
Cost-benefit analysis for non-economists 9.30am–12pm, 12, 13, 14 March 2024 Ideal for government analysts (outside economics), and policy and finance professionals who are involved in preparing and reviewing business cases and impact assessments. This course is run online. To book: Cost-benefit-analysis for non-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 Macroeconomics refresher and update 9.30am–4pm, 18, 19 March 2024 Professor Andy Ross returns for this popular two-day course run in person. The course sets out the key macro models in use today and relates them back to understanding key policy questions. To book: Macroeconomics – Refresher and Update
SPE Courses Overview of Cost-benefit analysis with applied example 9.30am–12.30pm, 14, 15, 16 May 2024 This popular course is ideal for analysts who want an overview of cost-benefit analysis. Run online over three half days we cover all basics of a good CBA and then bring the theory to life with an applied example conducted in excel. To book: Cost-Benefit Analysis with Applied Example