Reminders: Lunchtime, 1-2pm in HumSS 125 is the latest Economics Conversation, where today we’ll be discussing the upcoming Financial Settlement and Autumn Statement by the UK Government. These are both statements likely to be all the more interesting in light of recent events surrounding tax credits and the government’s fiscal charter.
Also, at 4pm today in Palmer 104 we have Lord Kerslake, former Head of the Civil Service, speaking at our Policy in Practice seminar. This is an event open to all, and a really great opportunity to hear more about how government works, particularly when it comes to the role economics plays (or doesn’t) in the policy-making process.
There is so much to discuss about these investments; many question why it is necessary to secure funding from China for large investment projects, particularly as interest rates remain very low (c.f. Corbyn’s People’s QE which attempts by a different (and inflationary) method to do the same thing).
It is clearly a reflection of the emerging economic power of China, which became the world’s largest economy in 2014. In addition, its regular and massive trade surpluses have left it in a position with lots of “cash in the bank”, so to speak.
With regard China’s investments in the UK (we’re 8th on its list of favourite places to invest), another criticism is that it’s nationalisation – just by China, rather than the UK: “The government will indeed put some of our most vital infrastructure under state control – but the states in question will be France and China.” Of course, the reality that China takes a one-third stake in Hinkley Point is ignored. Also ignored are the huge costs and uncertainties involves in investing such an epic amount of money (£24bn!), without knowing what the outcomes will be in however many years it is until the plant is operational.
Hence, an alternative take here is that actually, the UK does well. We get other countries to stump up the finance for a cripplingly expensive infrastructure project. The Chinese see it as beneficial, as must the UK government, else one party of the two negotiating would not agree to it, and the trade would not occur.
On Monday (not wishing to look ahead of the all important weekend that’s about to arrive) we have the next instalment of Conversations in Economics in the Department (room 125 in HumSS Building, 1pm on Monday).
Every Monday during term time we meet in less formal circumstances to talk about economics: these are our Conversations in Economics, in which we usually reflect on some pertinent real world event, and attempt to apply some economics to it.
Last week we talked about Corbynomics in light of the Labour Party conference, and on Monday of next week we meet in HumSS 125
at 1pm to talk about Greece, EMU and Austerity.
While Greece may have fallen off our news radars in recent months, at least in terms of its economic situation (as opposed to one of the first places refugees have been arriving in the EU), it remains a place with deep economic problems, as the chart below shows:
Greek GDP since 1995
Since 2006 Greek GDP has fallen by a third in real terms. To try and make some sense of that, if a road had 9 factories on it, 3 would have by now shut down and not be producing anything (with subsequent unemployment that that would entail).
So, it’s still as important a time as ever to be talking about Greece, its situation within the EU, and the austerity it has had forced upon itself.