Growth only way out from the Covid mire – leading macroeconomic influencers
Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here
X

Growth only way out from the Covid mire – leading macroeconomic influencers

22 Nov 2021

UK should target the 2.5%-a-year growth rates seen in the 1990s and 2000s than the 1.3% average in the decade after the financial crisis.

Growth only way out from the Covid mire – leading macroeconomic influencers
Credit: Glitch Images/Shutterstock.com.

Economists believe that UK politicians and policymakers should wake up to the urgency of providing the conditions for generating growth, rather than on increased public-sector spending to escape the pandemic distress.

Gerard Lyons

Gerard Lyons, chief economic strategist at Netwealth and a senior fellow at Policy Exchange, shared an article by Oliver Shah, an associate editor of The Sunday Times, on going for growth being the only way out of the pandemic turmoil. Lyons tweeted that Shah focuses on the three-arrow policy vision he has called out for, including a focus on supply-side disruptions, lowering taxes, and smarter regulation in the UK.

A Conservative Party figure, Shah warns both Britain’s Chancellor Rishi Sunak and Prime Minister Boris Johnson, about the high levels of public spending during the coronavirus crisis. The Chancellor raised taxes by $54bn this year, raising the tax burden to exceed 36% of the national income, and increased public spending to reduce the size of the economy to since the early 1980s.

As companies hurry out of the Covid mire, they are slipping backwards due to supply chain issues, labour shortages, rising corporation tax, and national insurance aids, Shah added.

Claudia Sahm

Claudia Sahm, an economist and former director of macroeconomic policy at the Washington Center for Equitable Growth, and a section chief at the Board of Governors of the Federal Reserve System, shared an article on increasing gas prices and high costs of holiday meals in the US expected to aggressively hurt the Democrats as well, who are now fearing that the pandemic-induced inflation may topple their electoral prospects in 2022.

Despite higher wages and falling unemployment rates in the US, the Democrats are expected to face a hostile political environment amid the highest inflation in 30 years, as the country pulls out of the pandemic.

Some economists and most Republicans believe that the Democrats’ $1.9tn Covid relief aid in March 2020 has overstimulated the demand. They further believe that, if passed, the Democrats’ new Build Back Better spending measure, which aims at supporting struggling families and workers with the most substantive programmes implemented since the 1960s, will further push up prices.

Reports suggest that consumer prices in Michigan and Midwest increased by 6.6% in October 2021, more than the national average, compared to 2020. This like the national spike, has been driven by a high demand for goods by consumers spending after the Covid lockdowns, and global supply chain disruptions, economists opine.

Saifedean Ammous

Saifedean Ammous, assistant professor of economics at the Lebanese American University, retweeted an article shared by Michael Saylor, entrepreneur and co-founder of MicroStrategy (MSTR), on a small restaurant chain in Canada called Tahinis having yielded 460% returns on the investments made in Bitcoin during the Covid-19 pandemic to protect their profits against the surging inflation and to a gain competitive advantage in the marketplace.

The Canadian company also stated that it helped other small businesses to adopt a Bitcoin standard strategy during the virus crisis. Although it did not disclose how much Bitcoin it holds on its balance sheet, the company stated that its sales exceeded $8m over the past year.

Tahinis is expected to expand to nine locations and open 29 restaurants in 2022. The restaurant chain started recovering in May 2020, after its sales dropped by 80% and forced layoffs. The Bitcoin strategy along with a quick-service restaurant model instead of an in-person dining model helped the chain recover the lost sales.