Press Release: UK should back Greek NGDP-linked debt restructuring plan

For further comments or to arrange an interview, contact Communications Manager Kate Andrews: / 07584 778207

Following the meeting between George Osborne and new Greek finance minister Yanis Varoufakis, Lars Christensen, Fellow at the Adam Smith Institute, said:

The European Central Bank's job is to ensure nominal stability in the Eurozone economy. The ECB should not bail out governments and banks.

Unfortunately again and again over the past six years the ECB has been forced to bail out Eurozone states. Hence, the ECB has repeatedly conducted credit policy (rather than monetary policy) to avoid Eurozone countries defaulting.

The ECB itself is largely to blame for this because it has kept monetary conditions far too tight. However, it has been under tremendous pressure to bail out nations and banks rather than conduct sound monetary policies.

By linking Greece's EU and ECB debts to Greek nominal GDP, as Varoufakis has suggested, Greece's public finances would be less vulnerable to monetary policy failure in the Eurozone.

The Chancellor George Osborne should be an enthusiastic supporter of Varoufakis’s debt plan as it would cut the cost of the ECB's tight money policies and reduce the danger of another major Eurozone crisis.

Notes to editors:

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at / 07584 778207.

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

Ben Southwood criticises limits on cheap steel imports to the UK in CityAM

Head of Research at the Adam Smith Institute, Ben Southwood, criticised calls for limits on cheap steel imports to the UK in CityAM.

However, critics of intervention voiced their disagreement. “Like a drop in the oil price, it [a low steel price] can hurt some industries, but, like a drop in the oil price, it is an overall benefit to society,” Ben Southwood, head of research at the Adam Smith Institute, told City A.M.

Read the full article here.

A British basic income? Green leader Natalie Bennett is a bad advocate of a good improvement to the welfare system - Sam Bowman writes for the International Business Times

Deputy Director of the Adam Smith Institute Sam Bowman makes the argument for a British basic income in The International Business Times:

As most people laughed at Natalie Bennett's car-crash interview with Andrew Neil this weekend, in which the Green Party leader appeared to have no grasp of any of the numbers behind her policies, a few unlikely viewers were wincing.

Her craziest-sounding policy, to give a "basic income" of £72 a week to everyone in the country regardless of income at a cost of £280bn to the Exchequer, has some surprising supporters on the free market right.

Many free marketeers, including Nobel laureate Milton Friedman, favour a form of welfare known as a "Negative Income Tax". This would replace existing benefits aimed at alleviating poverty like tax credits and jobseekers allowance with a single automatic payment that is tapered off according to earnings.

Read the full article here.

Ben Southwood's comments on eurozone QE feature in The Mail Online

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Ben Southwood, head of research at thinktank the Adam Smith Institute, said: 'Quantitative easing cannot solve many problems, but there is precisely one it can tackle—deflation brought about by central bank incompetence, like that we are now seeing across the eurozone. That was what caused the Great Depression in the 1930s and easier money can reverse it.

'What's more, the structural problems economists have identified in Europe are very real. Even before the crisis, countries like Italy and France were hamstrung by tight labour market regulations that kept unemployment close to 10 per cent. Changing these can enhance growth in the short and long run, and QE should be combined with rigorous reform so that long-term growth can be achieved.'

Read the full article here.