Brexit creates new opportunities and new risks for the British and EU financial markets. Both could benefit, but a more likely outcome is a fall in the quality of financial regulations, more inefficiency, more protectionism, and more systemic risk.
Jon Danielsson, Robert Macrae, Jean-Pierre Zigrand, 24 June 2016
Anatole Kaletsky, 22 June 2016
If the UK leaves the EU, what will happen to the UK economy? In this video, Anatole Kaletsky argues that Brexit would be economic suicide, or at least self-harm. A trade agreement that grants access to the Single Market implies conceding political sovereignty, contributing to the EU budget, and free movement of labour. This video was recorded during the “Economics of the UK’s EU Membership” conference organised by the National Institute of Economic and Social Research in February 2016 and held in London.
Karl Whelan, 20 June 2016
A large amount of business done in the City is linked to the UK’s membership of the EU. In this video, Karl Whelan discusses the impact of Brexit for the UK’s financial sector. He also argues that leaving the EU would take away the UK’s voice in shaping future legislation, which it would nonetheless have to follow in order to retain access to the Single Market. This video was recorded during the “Economics of the UK’s EU Membership” conference organised by the National Institute of Economic and Social Research in February 2016 and held in London.
Nicholas Crafts, 15 June 2016
If the UK leaves the EU, what's next for the economy? In this video, Nicholas Crafts of the University of Warwick discusses the impact of EU membership on the British economy. The type of agreement the UK would reach outside the EU is most important, and the risks outweigh the potential gains. This video was shot during the “Economics of the UK’s EU Membership” conference organised by the National Institute of Economic and Social Research (NIESR) on 23 February 2016 and held in London.
Stefano Micossi, Ginevra Bruzzone, Miriam Cassella, 06 June 2016
Following the financial crisis, the EU banking system is still plagued by widespread fragilities. This column considers the tools and legal provisions available to EU policymakers to address moral hazard and incentives encouraging excessive risk-taking by bankers. It argues that the new discipline of state aid and the restructuring of banks provide a solid framework towards these ends. However, the application of new rules should not lose sight of the aggregate policy needs of the banking system.
Jean-Marc Fournier, 26 May 2016
The limits of the European Single Market have often been highlighted. This column argues that although implicit barriers remain, the Single Market has delivered substantial benefits to member countries. New empirical evidence is presented of the trade and FDI gains that Central and Eastern European countries have enjoyed since joining the Single Market. On top of making regulations more competition-friendly, regulatory harmonisation can boost the economic links between countries.
Timothy J Hatton, 23 May 2016
The Syrian exodus has created a crisis that has thrown the existing European asylum system into chaos and has led to an increasingly polarised debate over solutions. This column argues that in the long term, we need to shift away from the current system of ‘spontaneous’ asylum migration towards a comprehensive resettlement programme. However, a radical shift towards resettlement is unlikely while the Syrian crisis continues at its current intensity.
Gabriel Felbermayr, Jasmin Gröschl, Thomas Steinwachs, 27 April 2016
The refugee crisis has placed Europe’s Schengen Agreement under stress, with some calling for the reintroduction of identity checks and other border controls. This column presents new estimates of the potential costs of such controls. On average, the removal of controls at one border acts like the removal of a 0.7% tariff. The controls currently notified to the EU Commission could lower EU GDP by around €12.5 billion. The full demise of Schengen would be about three times as costly.
Matthias Busse, Daniel Gros, 04 April 2016
Through the Eurozone rescue mechanisms, Germany provided the periphery with hundreds of billions in debt at very low rates. There is a widely held notion that these savings would have been better used at home. This column challenges this notion, presenting evidence that Germany’s net asset position held up well, remaining much higher than domestic returns. The main reason is that Germany’s part in the rescue operations was actually much smaller than its claims towards the periphery.
Swati Dhingra, Thomas Sampson, 04 March 2016
In June, UK voters will decide whether to remain part of the EU. This column explores the UK’s options if a majority votes in favour of Brexit. One possibility is for the UK, like Norway, to join the European Economic Area and thereby retain access to the European Single Market. An alternative would be to negotiate bilateral treaties with the EU, as Switzerland has done. All options, however, involve a trade-off between political sovereignty and economic benefits.
Willem Buiter, Ebrahim Rahbari, Christian Schulz, 02 March 2016
Britain will hold a referendum on whether to stay or leave the EU. Current polls point a very close vote. This column argues that Brexit could have serious economic and political consequences for the rest of the EU. The economic and financial frictions could be limited if both parties try to strike an amicable separation agreement. But political considerations, including the desire of the rest of the EU to prevent Brexit emulation, might result in a far more damaging outcome, not just for the UK.
Elias Papaioannou, 12 February 2016
Institutional redesign and reform are currently being debated and implemented at the EU and EZ levels. However, there is a growing institutional gap across member countries – especially between the core and periphery. This column illustrates the extent of this gap. Weak institutions have already stifled reform efforts, such as the Economic Adjustment Programs undertaken by Greece and Portugal. The success of pan-European reforms and the future of the Eurozone will require coordinated action to close this institutional gap.
André Sapir, 12 February 2016
Misalignments of real exchange rates continue to be the most visible and painful symptom of asymmetric shocks within the Eurozone. An important factor behind such misalignment is the difference in national wage formation and bargaining systems, especially between core and periphery members. This column argues that all members need to have institutions that ensure wage developments are in line with productivity developments. This would eliminate an important source of asymmetric behaviour and reduce resistance to EZ-wide fiscal mechanisms capable of absorbing asymmetric shocks.
Jacob Funk Kirkegaard, 25 January 2016
The migrant crisis will continue to top headlines in 2016. This column takes a detailed look at the EU’s response to dealing with migration, concluding that everything points towards failure as the likely outcome. Unlike the most critical aspects of the Eurozone Crisis, the main drivers of the current migration emergency are external factors such as war. These circumstances are highly unlikely to change in the medium term. The hardball politics and threats that proved extraordinarily effective in coercing member states into accepting domestic political conditionality in return for financial aid during the Eurozone Crisis are doomed to fail when it comes to migration.
Giacomo Calzolari, Vincenzo Denicolò, 20 January 2016
Intel dominates the market for microchips, an essential component of innumerable electronic devices. This column proposes a structured antitrust test that could tackle the issue of how antitrust authorities make decisions on whether a dominant firm’s rivals can compete for exclusive contracts effectively. This decision depends on the size of the dominant firm’s competitive advantage, which isn’t something that we can easily measure but is something that is correlated with other variables, such as the firms’ market shares.
Pablo Fajgelbaum, Eduardo Morales, Juan Carlos Suarez, Owen Zidar, 06 January 2016
Tax policy varies widely across countries and across regions within countries. This column presents evidence suggesting that in the case of the US, harmonising tax rates could lead to significant increases in aggregate economic output. EU policymakers should take note.
Biagio Bossone, Marco Cattaneo, 04 January 2016
‘Helicopter tax credits’ have been proposed as a means of injecting new purchasing power into the economies of Eurozone Crisis countries. This column outlines one such system for Italy. The Tax Credit Certificate system is projected to accelerate Italy’s recovery over the next four years, and will likely be sustainable. It also provides a tool to avoid the breakup of the Eurosystem and its potentially disruptive consequences.
Matthew J. Bloomfield, Ulf Brüggemann, Hans B. Christensen, Christian Leuz, 17 December 2015
Labour mobility is an important prerequisite for the efficiency of labour markets. In the EU, however, different standards across countries present an implicit economic barrier for high-skilled professionals. This column examines how the recent EU harmonisation of professional standards in accounting affected cross-border migration relative to other professionals. The harmonisation had a strong positive effect on accountants’ cross-border migration. Harmonisation could thus be a potentially powerful tool for policymakers seeking to improve labour market efficiency.
Daniel Gros, Willem Pieter de Groen, 15 December 2015
Banking policy remains of great importance in the aftermath of the Global Crisis. This column presents recent research on the ability of the Single Resolution Fund to weather any future crisis scenario imaginable. The fund will be built up gradually over the coming decade, but as the losses from any future banking crisis are also likely to arise over a long period of time, the Single Resolution Fund should be sufficient to deal even with a crisis of similar proportions to the last one.
Scott Ross Baker, Nicholas Bloom, Steven J. Davis, 15 December 2015
The recent influx of refugees to Europe has stoked security fears and created anxiety about the social and economic consequences. This column provides new quantitative indicators for the intensity of migration-related fears and policy uncertainty, based on newspaper articles. The indices are presented for the US, UK, France, and Germany, and extend back to 1995. They show that recent levels of concern and uncertainty in European countries about migration are unprecedented.