Ok, I'm gonna stick my neck out: I think the UK government is currently the most serious - and most growth focussed - in the G7. The investor gloom & worries will dissipate. Please prove me wrong.

Here's why I think the UK is a good bet: 🧵 (1/8) The UK gov't is genuinely focussed on solving structural problems. (1) No other G7 economy is at it so much when it comes to infrastructure & planning reform. (2) they're boosting public investment; (3) they have a very strong AI plan [take Demis' word].

https://x.com/demishassabis/status/1878940489816355029

NEW: The debate about jobs vs automation is old. But breakthroughs in generative AI are new, and are set to transform knowledge work.

In our report, we show even existing AI could soon cause big disruptions in parts of the labour market. We need to prepare for this now. (1/9) Currently most employers are still experimenting with the technology. But soon, in the first phase of deployment, 11% of work could be exposed to 'here and now' AI.
In the second wave, if AI gets integrated more deeply in organisations, 59% of work could be exposed. (2/9)

Thank you for your response, Jeremy. I'd highlight five points in return.

(1) Given you didn’t repeat your claim that borrowing to invest would be hugely inflationary, are you no longer making this claim?

https://twitter.com/Jeremy_Hunt/status/1744789237831004265

(2) While it's not my job to defend Labour’s specific plans, your tax calculation seems off. Can can you share how it was done? For one, public investment brings financial returns which don't seem to be factored in. That’s why so many economists think investment should be boosted

NEW: There is a lot of confusion in the debate around profits and inflation. On the one hand, senior officials at the Federal Reserve and the European Central Bank stated that "profits have recently been a key contributor to total domestic inflation". (1/8) On the other hand, many commentators decry that firms' excess profits can't possibly have driven inflation, pointing to supply-demand mismatches instead. The resolution of this conundrum likely is that rather than causing inflation, firms with market power *amplified* it. (2/8)

Spending cuts are not inevitable. Here's a table showing how 'fiscal hole' estimates hugely depend growth and interest rate assumptions in 3 years' time. I think often-cited estimates rest on either (A) quite low growth or (B) unrealistically high interest rate assumptions. (1/9) Some implications: First, given the importance of this, people should state very clearly what their assumptions are. Where are they on this table and or where are their assumptions different? We need a transparent debate about this - not black box claims! (2/9)

NEW: It would be wrong for @RishiSunak to make spending cuts. In a cost of living crisis, the government should continue to support households & businesses and bolster public services. Our new report shows that we can do more, while balancing risks to the economy. (1/10) What is constraining government spending? We argue that (1) in the short-term it is inflation risks, which was a key driver behind the mini-budget market turmoil; and (2) in the medium term it is the design of the government's fiscal rules.
But we can manage these... (2/10)

NEW REPORT: Inflation is mainly driven by global factors. But many corporations have increased their profit rates while people's wages are not keeping up. @chrishayes and I find that UK aggregate profits were up 34% at the end of 2021. Covered in @thetimes this morning. (1/6) The bulk of the rise in profits is driven by small number of companies. 25 companies accounted for 90% of the increase in profits - mostly basic materials (incl. mining and commodities) and energy firms. (2/6)

Many are saying we now have a ‘German-style’ short-time working scheme. But I think there are at least four key differences to the German 'Kurzarbeit' scheme: (1/5) Key difference 1: With Kurzarbeit there is no employer contribution for hours not worked. In the UK this contribution is 33%. So in the German system it is less costly for firms to retain workers. (2/5)

Here is an explainer why @RishiSunak’s new Job Support Scheme will likely not be very effective in preventing layoffs. (1/6) Assume a scenario where two workers have the same skills and are doing the same type of job (as is often the case in low-paid jobs). And now assume their firm has only 50% of its usual demand for some time, because of covid. (2/6)

Here is an explainer for why @RishiSunak’s new Job Support Scheme will likely be not be very effective in preventing layoffs. (1/6) Assume a scenario where two workers have the same skills and are doing the same type of job (as is often the case in low-paid jobs). And now assume their firm has only 50% of its usual demand for some time, because of covid. (2/6)

My initial take on @RishiSunak's new job support scheme:

(1/4) Overall extending the scheme for 6 months is a welcome relief of the uncertainty surround firms. But has missed the opportunity of boosting many viable jobs. (2/4 ) The government has basically gone for the CBI proposal. Because of the large employer contribution to hours not worked, the scheme might not prevent many layoffs. It does not make it more attractive to hold on to more people on part time, rather than fewer on full time.

A quick comparison of the @CBI_Economics proposal for JRS reform and ours:

(1/5) Basically the CBI proposal is simply a continuation of the flexible furlough scheme with 66% of wages paid for hours not worked. It does not actually incentivise part-time working. (2/5) The CBI scheme is more expensive for employers. The CBI proposes a 33% employer contribution for hours not worked - that's more than in Oct JRS. This means firms contribute 10 percentage points more to the wage bill in the CBI scheme than in our proposal (for 1/2 FTE case).

Share jobs to save jobs! Our new report argues we need a work sharing scheme instead of furlough.

The cliff edge (1/4). The furlough scheme is ending in October when the economy is still recovering. Three million jobs could be lost then.

ippr.org/files/2020-08/… The bridge (2/4). A work sharing scheme can keep people in work during the recovery. Eg if a business has only half of its usual demand, it could let its workers work half the time (rather than firing half of them). This would be temporary, with a return to full time in 2021.

We are witnessing a profound change in working patterns. Let's design them in a way that improves people's lives!

(1/3) In many industries, including manufacturing, people still work long hours (38h or more), even though almost half of employees would like to work fewer hours. (2/3) The covid crisis has shown that new, more flexible working patterns are possible. For instance, more than a third of workers in defence manufacuting have worked either more flexibly or shorter hours during the crisis. This shows that work time patterns can change.

THREAD: Once the economy reopens, where are all the jobs going to come from? We find that investing in a clean reocovery (homes, transport, nature, care, industry) can generate 1.6 million jobs. That's 3/4 of those likely lost during this crisis. ippr.org/files/2020-07/… (1/4) Many of these investments could take place soon and they have high environmental and social benefits. (2/4)

My analysis of today's GDP numbers in three charts:

(1/1) The fall in GDP has not (yet) reached the decline expected by the OBR. (2/2) But the slump in the hospitality sector has already exceeded the OBR’s scenario.

Are we doomed by high debt in times of covid? Nope. I argue there is an opportunity for @RishiSunak to drive a recovery that is socially just & avoids the pitfalls of austerity. Here are the 4 pillars of such a sustainable recovery.(1/5)

blogs.lse.ac.uk/politicsandpol…
@LSEpoliticsblog Pillar 1: Design a big investment stimulus to prevent the ‘Great Shutdown’ from becoming another ‘Great Depression’. A depressed economy would be disastrous for society. It would be equally bad for the Treasury – a shrinking economy also means shrinking tax receipts.(2/5)