ASI comments on the latest CPI figures feature in Newsweek

Head of Research Ben Southwood’s comments on the latest CPI figures feature in Newsweek.

This is the first time the UK has entered deflation since official records began in 1996 and the first time since 1960 based on historic estimates.

However, Ben Southwood, head of research at the Adam Smith Institute, said the negative figures should be embraced by consumers.

“We have deflation – albeit extremely mild deflation – for the first time since the 1960s. But this seems to be ‘good deflation’, coming mainly from cheaper goods – especially cheaper oil – rather than a drop in consumer demand,” he said.

Southwood added that the Bank of England, which has set a target of 2% inflation, should remain vigilant against bad deflation.

Read the full article here.

Sam Bowman’s comments on the removal of Adam Smith from £20 notes feature in The Daily Mail

Deputy Director Sam Bowman’s comments on the Bank of England’s decision to replace Adam Smith on £20 notes feature in The Daily Mail:

The change could leave Scotland with only one representative on Bank of England notes, inventor James Watt, who appears on the £50.
Sam Bowman, of the think-tank the Adam Smith Institute, said: ‘It’s a great shame that the bank is removing Adam Smith from the £20 notes.
‘Smith is not just the father of economics, he is in many ways the father of the modern industrialised world.’

Press Release: This is good deflation – no need to panic

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07584 778207

Commenting on the new UK inflation figures, Ben Southwood, Head of Research at the Adam Smith Institute said:

We have deflation—albeit extremely mild deflation of 0.1%—for the first time since the 1960s. But this seems to be ‘good deflation’, coming mainly from cheaper goods – especially from cheaper oil— rather than from a drop in consumer demand.

Economists worry about deflation, but only the ‘bad’ kind, when prices are sliding at the same time as wages and output. Bad deflation makes debts harder to bear, puts people out of jobs, and can lead to a downward spiral. Good deflation, when wages and output are rising steadily, makes everyone better off.

Though the Bank of England should stand vigilant against bad deflation, and ease policy if markets think it is coming, it should hold fire right now as UK employees enjoy real pay increases for the first time since before the recession.

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Sam Bowman’s comments on the new Culture Secretary feature in The i

Deputy Director Sam Bowman’s CityAM piece on John Whittingdale’s appointment to Culture Secretary featured in The i:

The BBC was never meant to be the 5bn behemoth that it has grown into. It needs to be cut down to size, and the new Culture Secretary – John Whittingdale – might be the man to do it.