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Economics Teacher ConferenceEd Conway
July 2011
2No normal recessionfive years on…
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-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1930-1934; 5.23%
1979-1983; 3.41%
1990-1993; 9.91%
2008-; -2.42%
Source: NIESR
3So real incomes are falling
Source: Office for National Statistics. Median hourly earnings excluding overtime for all employees
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 10.00
10.50
11.00
11.50
12.00
12.50
£ per hour
4Fiscal conservatism (I)
Source: OECD
5Fiscal Conservatism (II)
Source: Bank of England
6Fiscal Conservatism (III)
Source: Institute for Fiscal Studies
7Monetary activism
2007 2008 2009 2010 2011 2012 2013 413650
100
200
300
400
500
600
UKUSJapanEuro Area
Source: Bank of England
8
What does £375bn buy you these days?
91. A third of the gilts market
2002
Q1
2002
Q3
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Households
Private Non-Fi-nancial compa-nies
Bank of England
Other Financial Institutions
Insurance Com-panies and Pen-sion funds
Source: Debt Management Office
102. Every single automobile in Britain (cost: £185bn)
113. Scotland
124. Some pennies
135. A present
£14,423 for every single household
in the UK
14Net results: 1. distributive impactgains for UK households from QE by income decile
X axis measures change in household income (£) Source: Bank of England/Sky News
152: UK housing market
-40
-20
0
20
40
60
80Price-to-rent ratio
Over-valuation
Under-valuation
163. Higher prices for other exclusive assets/services
174. Divided UK
18No global rebalancing
Source: OECD
19No euro rebalancing (I)Unit labour costs
Source: OECD
2000
-01-
01
2000
-06-
01
2000
-11-
01
2001
-04-
01
2001
-09-
01
2002
-02-
01
2002
-07-
01
2002
-12-
01
2003
-05-
01
2003
-10-
01
2004
-03-
01
2004
-08-
01
2005
-01-
01
2005
-06-
01
2005
-11-
01
2006
-04-
01
2006
-09-
01
2007
-02-
01
2007
-07-
01
2007
-12-
01
2008
-05-
01
2008
-10-
01
2009
-03-
01
2009
-08-
01
2010
-01-
01
2010
-06-
01
2010
-11-
01
2011
-04-
0190.00
95.00
100.00
105.00
110.00
115.00
120.00
125.00
130.00
135.00
140.00
GermanyIrelandSpainFranceGreece
20No euro rebalancing (II)Beer prices
Source: Eurostat
2000
-01-
01
2000
-07-
01
2001
-01-
01
2001
-07-
01
2002
-01-
01
2002
-07-
01
2003
-01-
01
2003
-07-
01
2004
-01-
01
2004
-07-
01
2005
-01-
01
2005
-07-
01
2006
-01-
01
2006
-07-
01
2007
-01-
01
2007
-07-
01
2008
-01-
01
2008
-07-
01
2009
-01-
01
2009
-07-
01
2010
-01-
01
2010
-07-
01
2011
-01-
01
2011
-07-
01
2012
-01-
01
2012
-07-
01
2013
-01-
0190.0
100.0
110.0
120.0
130.0
140.0
150.0
160.0
GermanyIrelandSpainFranceGreece
21
Current account balances
Bretton Woods compared (I)
World GDP (annual average %)
World inflation
Gold Standard (1870-1913)
1.3 0.6
Interwar period (1925-39)
1.2 0
Bretton Woods (1948-72)
2.8 3.3
Current (1973-2008)
1.8 4.8
Bretton Woods compared (II)
National downturns (share of period)
Banking crises (per year)
Gold Standard (1870-1913)
19 1.3
Interwar period (1925-39)
27 2.1
Bretton Woods (1948-72)
4 0.1
Current (1973-2008)
13 2.6
Bretton Woods compared (III)
External defaults (no per year)
Current account imbalances (surplus + deficit)
Gold Standard (1870-1913)
0.9 2.4
Interwar period (1925-39)
1.5 1.2
Bretton Woods (1948-72)
0.7 0.8
Current (1973-2008)
1.3 2.2
25But the future is brighterPotential growth rates
2012-17 2018-30 2031-50
United States
2.0 2.1 1.7
Japan 0.8 1.1 1.1
Germany 1.2 0.9 0.7
United Kingdom
1.7 2.6 2.0
France 1.5 2.3 1.4
Italy 0.1 2.0 1.4
Canada 2.0 2.2 1.9
Source: OECD