 | The “new normal” appears to be chaotic, tumultuous times. I became the IEA’s fourth permanent Director General at the end of 2009 in the backwash of the global financial crisis. Since then, we have had a period of so-called “austerity” – in which the state continued to live well beyond its means. This was followed by the protracted Brexit psychodrama and the Covid pandemic, which led to an enormously enhanced role for the state.
Today, after a lengthy period of getting drunk on absurdly cheap credit, the UK is facing stubbornly high inflation, a flatlining economy and the highest tax burden since the 1940s. Meanwhile, the state's size and role have continued its upward trajectory, squeezing on the free, enterprising side of the economy.
This state of affairs – and recent history – might incline those who subscribe to the IEA’s worldview to put their head in their hands. After all, our mission is to shift the climate of opinion in a free market, liberalising direction. Overall, the policy landscape has turned against us in recent times.
But I’m not at all downbeat. Milton Friedman said that the role of think tanks was to keep the right ideas alive and available and wait for an inflexion point. At that point, you may find what was considered politically impossible becomes a practical necessity.
Over my tenure as Director General, I’m enormously proud of the Institute’s role in incubating, developing and promulgating free market ideas. We have continually challenged the prevailing orthodoxy and have a genuinely influential position in the national conversation.
If priced, our media profile alone would have a market value of tens of millions of pounds yearly. A quick glance across our back catalogue of research papers shows we have analysed and developed solutions for many of the policy problems afflicting the United Kingdom – from the housing crisis to the crumbling NHS. Our outreach to students and young people – the leaders of tomorrow – has never been on such a grand scale.
After careful reflection, I’ve decided that now would be a good time for the IEA to look for its next Director General. |
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| I’ve often been told that you should never spend more than ten years in any job. I’ve been in post for nearly fourteen years – and I feel if I don’t move on now, I may stay here forever. This prospect might sound conceptually attractive to me, but I also think change can be a great force for good.
Leading the IEA is stimulating, intellectually fulfilling, and immense fun. Our new chairman, Linda Edwards, who wrote in the newsletter last week, has a stellar knowledge and understanding of the liberty movement and has already begun the search for my successor. |
|  | Being Director General of the IEA is one of the best jobs in Britain. I have no doubt we will besieged with applications from an array of brilliant candidates.
Of course, legally the IEA is an educational charity and a company limited by guarantee. But in reality it's so much more than that — it's a network of hundreds of friends and colleagues united in the cause of advancing freedom.
Thanks so much to all of you for being a part of it under my watch. I'm staying around for a while yet — I'll be here to help my successor hit the ground running. I'll then become the IEA's Senior Economics Fellow and continue to use what talent I have to advance the cause of market liberalism and to strengthen the liberty movement.
I appreciate your support in the years to date and in anticipation of the years ahead.
See you soon! |
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| Mark Littlewood
IEA Director General |
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| | | After a distinguished 14-year tenure, Mark Littlewood is stepping down as the IEA’s Director General. Littlewood will remain in post until a successor has been appointed and is in place to ensure a seamless transition. The Board of Trustees has begun the search for a new Director General.
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| | |  | Abandon interest rates rises, says Shadow Monetary Policy Committee
The IEA’s Shadow Monetary Policy Committee (SMPC) is a group of independent economists whose purpose is to monitor the decisions of the Bank of England’s official Monetary Policy Committee and make its own policy recommendations. Before this week’s rate decision, the SMPC voted 8-1 to keep the Bank Rate at 5 per cent. The Bank of England raised interest rates by 25 basis points to 5.25 per cent, the highest since April 2008. The SMPC was among the first groups to warn that loose monetary policy during the pandemic necessitated higher interest rates in July 2021. However, the Committee now says further monetary tightening should be paused until the full impact of recent rate rises and quantitative tightening becomes clear. The SMPC assessed the risk of inflation becoming embedded to be low because of weak economic growth and the easing of supply-side pressures. One member, economist Patrick Minford (Cardiff Business School, Cardiff University), said that getting inflation down from very high levels will be a long and slow process; and overreacting and over-tightening could damage the economy and spark a financial crisis. Another member, Juan Castañeda (Vinson Centre, University of Buckingham), highlighted that the contracting money supply will have a robust disinflationary pressure over recent months.
| | Trevor Williams, SMPC Chair and former chief economist at Lloyds Bank, said:
”It will take some time for previous rate rises and falling global commodity prices to feed into lower inflation. But, in the meantime, further rate rises by the Bank of England are unnecessary and could do some economic damage without lowering inflation any faster.
“The UK economy is on the precipice of a sharper slowdown. There has already been a contraction in the money supply, with less liquidly available for loans, lower house price inflation, and slowing economic activity, as shown in the sharp fall in the Purchasing Managers’ Index (PMI) for manufacturing.”
The media covered William’s comment extensively, including BBC News, Politico, ITV News, The Sun, and PolitcsHome. He also wrote in The Telegraph after the announcement. | | IEA Economics Fellow Julian Jessop responded to the news, writing that:
“The UK economy is like a frog slowly being cooked by ever higher interest rates. By raising the temperature further now, the Bank risks doing too much and, once again, only realising its mistake when it is too late.” |
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| | | | | | Director of Public Policy and Communications Matthew Lesh, The Daily Telegraph | Death tax… HMRC forecasts reveal that 49,400 extra families will pay inheritance tax due to frozen thresholds. Given the levy’s widespread unpopularity, unfairness and meagre revenue, the time has come for abolition.
Matthew debated journalist Polly Toynbee on TalkTV and discussed the topic with Alan Cole, Senior Economist at the Tax Foundation, on the IEA Podcast. |
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| | | | Head of Political Economy Dr Kristian Niemietz, The Times | Get building… Rishi Sunak and Sadiq Khan have been battling over how to solve London’s housing crisis, but both have ultimately failed to enable enough housebuilding to address the crisis. |
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| | | | | Trouble overseas… Government calculations suggest UK foreign aid cuts could lead to greater misery abroad. But given the lacklustre record of international aid in driving economic development, is it time to reconsider its effectiveness? |
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| | | | Press and Digital Officer Joseph Dinnage, CapX | Back to the drawing board… Scottish First Minister Humza Yousaf’s reversal on plans to restrict alcohol advertising in Scotland is a welcome step, but there is more work to be done to keep the nanny state at bay. IEA Head of Lifestyle Economics Christopher Snowdon recently authored Alcohol Advertising: What does the evidence show? |
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| | | | Christopher Snowdon, The Critic | Hit the road… Anti-car rhetoric is on the rise among London elites, but they fail to grasp that the rest of the UK still relies on them to get around. A trip outside of the bubble may be in order. |
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| | | | International Trade and Competition Fellow Shanker Singham, Daily Telegraph and Daily Mail | Consumer victory… The government’s announcement that the UK will continue recognising the EU CA mark is a win for consumers. It will boost regulatory competition and means that consumers can still purchase goods produced within the EU. |
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| | | | Research Assistant Daniel Freeman interviews Professor Keith Hartley, IEA YouTube | Competitive combat… The Wagner Group's attempted coup in Russia and actions across Africa and Ukraine has raised questions about private military contractors' roles on the international stage. What are the economics behind these groups and how can competition be introduced to the military sphere? |
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| | | | | The Institute of Economic Affairs (IEA) welcomes applicants for the Director General (DG) role. We are looking for a visionary leader who will provide strategic direction to promote the growth and effectiveness of the IEA. |
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| | | | Chairman Linda Edwards, IEA Blog | In memoriam… Former IEA Chairman Sir Peter Walters has died at the age of 92. In addition to a remarkable professional career, Sir Peter presided over a period of positive change and innovation at the IEA, expanding both the IEA office and the research output. He will be greatly missed. |
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| | Harnessing Africa’s Economic Vitality | | Africa’s economic potential… The Director of the Initiative for African Trade and Prosperity, Alexander Hammond, was in Cape Town, South Africa, to moderate a panel on how organisations across the continent can best leverage their expertise to help drive economic growth. Alexander was joined on the panel by John Mugabi, the Director of the IATP-partner organisation ALED, Chris Hattingh, Head of Policy at the Centre for Risk Analysis, and Bheki Mahlobo, a market analyst at ETM Analytics. |
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