Comments: Back below trend?

Rather than playing with the money supply and risk debasing the currency, how about cutting marginal tax rates to lower the cost of capital and improve incentives at the margin for risk taking?

Posted by Gary Bezowsky at February 8, 2006 05:43 PM

Agreed, but such talk has sadly become unfashionable in the UK.

Posted by David Smith at February 8, 2006 08:42 PM

The NIESR assumptions go against your thinking in the Sunday Times this week ie that we are below trend, slack in the economy and hence room for a cut. You still sticking with your view or think these numbers change anything?

Posted by Simon Woolfson at February 9, 2006 07:58 AM

If they are a fair representation of what will be happening in the first quarter then the MPC won't be cutting rates. But the NIESR numbers probably need to be taken with a pinch of salt. This is from AFX:

'However, Simon Kirby, a senior research officer at NIESR said the results have to be treated with an "element of caution", as much of the improvement is due to a weak comparative figure, which includes a dismal reading in October.

'In addition, Kirby said there's also some evidence that the pace of growth may have slowed down in January from the levels recorded in November and December.'

Posted by David Smith at February 9, 2006 10:17 AM