Would Greece flounder if it left the Eurozone? Sam Bowman argues NO in CityAM

Deputy Director of the ASI Sam Bowman took part in the CityAM Forum debate arguing that Greece would not necessarily flounder if it left the Eurozone.

A Greek Eurozone exit would throw the country’s banks into crisis, but it may still be its least-worst option. The European Central Bank has kept money tight across the Eurozone since 2008, but this has been most acute in Greece, where nominal spending collapsed during the financial crisis and has barely recovered since. This means that wages have had to fall in cash terms across the board for employment to recover, and they still have a long way to go. This process takes an excruciatingly long time because firms tend to prefer to fire some workers instead of cutting all their staff’s wages. That means many more years – perhaps more than a decade – of high unemployment. If Greece left the euro it could get around this process by devaluing its currency, as it and the other southern European states used to do before the euro. It would be very painful in the short term, but that may be preferable to the long-term depression that the country now faces.

Read the full article here.

What the Budget means for politics - Sam Bowman writes for Economia

Deputy Director of the Adam Smith Institute Sam Bowman gives a Budget round-up for Economia:

There was very little in this Budget to get excited about, either positively or negatively. Against a backdrop of astonishingly high employment and a strongly growing economy was a Budget filled with tiny little giveaways to worthy, but inconsequential, causes like the church roof repair fund. Instead of the big cuts to inheritance tax that many had hoped for, the chancellor fiddled while the economy boomed.

Employment is now at both the highest level and the highest rate since records began. Since 2010, 80% of the new jobs created are full time, and wages are finally now beginning to rise above inflation. The country is growing at a decent clip and is projected to continue growing at just under 2.5% annually until 2020 at least.

The main fly in the ointment here, as it has been for years, is productivity, which is still very weak. One reason for this may be that business investment is still very low compared to its pre-crisis level; other than cutting taxes on capital (thus boosting investment) there seems to be little the government can cost-effectively do to help this.

Read the full article here.

What Today's Budget Means For British Entrepreneurs - TEN's Philip Salter writes for Forbes

Director of The Entrepreneur's Network Philip Salter gave his budget round-up in Forbes, focusing specifically on what this year's budget means for entrepreneurs.

Chancellor George is a prudent man. Despite the UK’s buoyant economy and the upcoming election, today’s Budget wasn’t the spending splurge that many were expecting. As the Adam Smith Institute’s Sam Bowman quipped: “Osborne fiddles while the economy booms”.

Of course, what the Chancellor actually announces in the House of Commons is just the tip of the iceberg. The devil is in the 124-page document. And the one thing that stands out from this is the relentless focus upon policies to try to support Britain’s entrepreneurs. This is a government fixated upon innovation and growth.

Read the full comment piece here.

The ASI's Budget reaction features in CityAM

The ASI's Budget reaction was featured in CityAM:

Some analysts called for rapid and radical action.
“Throwing more money at the demand side will not solve the housing crisis – the country needs planning reform so that it is easier to build on Green Belt land,” said Sam Bowman from the Adam Smith Institute. “The only thing this policy will Help-to-Buy is the election.”

Read the full article here.

Adam Smith Institute Budget reaction: Osborne fiddles while economy booms

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07584 778207 Commenting on the 2015 Budget Statement, Deputy Director of the Adam Smith Institute, Sam Bowman, said:

The biggest story in today’s budget was not any of the measures announced but the extraordinary strength of the UK economy.

"Employment is now at the highest level and rate in history and, although productivity growth is still depressingly low, the economy appears to be very healthy overall. Those economists who predicted at the start of this Parliament that spending cuts would lead to mass unemployment should take a lesson from this.

Financial markets have been quiet and government borrowing is extremely cheap, a sign that the government still has the confidence of the markets on long-term deficit reduction. Any doomsayers about the UK’s fiscal position are going against the collective judgment of the people who actually have money on the line.

The best policies were ones we already knew about – raising the personal allowance will leave more money in full-time workers’ pockets, and is a good tax cut for people on low and middle incomes. Most of corporation tax falls on workers’ wages so the cut to that should boost wages, with the remainder coming off investment. Raising the upper-rate threshold and cutting alcohol duty are also both welcome moves.

This budget was filled with fiddly splurges on things like the church roof repair fund, and giving Libor fines to military charities is just bizarre, but thankfully most were triflingly small.

The most depressing big announcement was the ‘Help to Buy ISA’, which will subsidise first-time buyers’ savings pots. This will stoke up demand even more in a housing market that is suffering from insufficient supply. Throwing more money at the demand side will not solve the housing crisis – the country needs planning reform so that it is easier to build on Green Belt land. The only thing this policy will Help to Buy is the election.

Overall, this was not the giveaway budget that some had hoped for – or feared. With all of the tiny changes in this, it looks like Osborne is fiddling while the economy booms.

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

Dr Eamonn Butler's letter in The Evening Standard: London inequality stats misleading

Director of the Adam Smith Institute Dr Eamonn Butler wrote a letter published by The Evening Standard,  which highlighted the problems with recent inequality figures that suggest the poorest third of households in London only own one per cent of London's wealth:

Figures purporting to show that the poorest third of households own only one per cent of London's wealth [March 13] are utterly misleading. They use a "net wealth" calculation in which the "poorest" have more debt than assets. But these include people such as middle-class new graduates with student debts but otherwise excellent life prospects. London also has a large population of immigrants and young people who naturally have not accumulated as much wealth as those who are older and longer established. Tessa Jowell calling the figures "obscene" reveals a shocking ignorance of their true meaning.