Statistics

Question 1

How much GDP gap is mismeasurement at fault for

Answer 1

some argue 3%

Some argue up to 1/3

Question 2

What are laggard firms

Answer 2

• lower 40% of productivity distribution - only account for 10% of productivity

Question 3

Macro environment in 2009 and 2010

Answer 3

2009:
Deficit - 11.5%
Debt - 68%

2010
unemployment 8% - was 5.3 in 2007
Growth rate average 2-2.5, was at lowest of -6% in Q1 of 2009

Question 4

What was the size of sturctural deficit in 2008 and 2010

Answer 4

2008:
40% spending, 36% receipts

2010:
46% spending, 36% receipts

Question 5

What was the structural deficit in 2021/22?

Answer 5

1.3%

Question 6

What were the deficits in 2008,2009, 2010 and 2015

Answer 6

2008: -0.6% surplus
2009: -1%
2010: 2%
2015: slowly decline to 0.5%

Question 7

Debt and GDP in 2003 and 2021

Answer 7

2003:
£382bn debt, GDP was £2.057tn

2021:
£2.36tn debt, GDP £3.13tn

Question 8

What were debt-gdp ratios - what is the critical value?

Answer 8

Pre 2008 stable at roughly 35%
- Explosive path towards unnaffordable - 85% in 2012

Reinhart and ROgoff - 90% critical value - growth at -0.1%
- Actually 2.2% so may not be as suggested

Question 9

What was the deficit/GDP ratio in 2010 - what would the effect of austerity be on this

Answer 9

deficit/GDP was 7.6% - rising debt/GDP
- Deficit could be maximum of 1% of GDP
- Was expected to fall to 0 then turn positive by 2010 silly people

Question 10

What was the debt forecast with and without austerity

What was the effect of austerity on GDP?

Answer 10

2010 debt forecast was 60% in 2017
-Actually 75%

Pre crisis - growth roughly 2.2%, lost out on 13% growth after 2017

Post crisis - growth roughly 0.1-0.2%

Question 11

What are the deficit/gdp / debt gdp graphs for 3 countries

Answer 11

Germany: 3.1% deficit, 75% debt

Greece: 15.6% deficit, 120% debt

UK: 11.5% deficit, 68% debt

Question 12

What are the different sizes of multipliers?

Answer 12

OBR spenidng multiplier - 0.6

Public investment - 1

Income tax multiplier - 0.3

In recessions IMF argues it ranges from 0.9-1.7

In the long run it is equal to 0

Question 13

How much lower was the actual effect on GDP than estimated

Answer 13

Was £300m lower than estimated value both with and without austerity

Question 14

What was the effect of the pandemic on the deficit?

Answer 14

Forecast higher in march 2020 - was predicted to be 50-60bn, actually 320bn

Permanent loss of 2% GDP

March 2020 predicted GDP was 100-104, actual level was 75

Question 15

What was the impact of the pandemic on the debt/gdp ratio?

Answer 15

Expected to top out at <100%, stabilise and then fall gently

Question 16

Effect of trussonomics

Answer 16

Mini budget - forecast to be 36% GDP, fell to 35%

Forecast borrowing rate £99bn, actual rate £200bn
- Only stabilised around £100bn in 2026 - £70bn higher than it should have been

Debt - GDP:
Forecast to fall from 84% in 2020 to 80% in 2026

Instead, stable at 85% from 2020-22, rises up to 97% in 2026

Debts barely on falling path - estimated to fall by £28bn in 3 years, isntead falling by £9bn - at 97% of GDP instead of 80%

Exchange rates:
- Falling but stable at 1.15, fell to 1,075 against the dollar

Bond yields:
5 year bond yield, rising, stable at 3% - rose to 4.5%

30 year gilt - Sep 23 3.9%, Sep 28 5%

Question 17

Effect on New austerity

Answer 17

public borrowing expected 6% - with mini budget would be 8%

Bank rate expected to be 3% - with mini budget 5%

Interest on gilts fell from about 1.7% in october to 0.7% late nobvermber

Tax as a % of income increased above 37%, mini budget estimated it to be 35%

Question 18

What were the different values of spending:

Answer 18

22-23: 1bn

23-24: 7bn

24-25: 8bn - 6bn

25-26: -7bn

26-27: -14bn

27-28: -21bn