* TALKING POINT, PROFESSOR LEN SHACKLETON
* A NEW DIRECTION?
* REGULATION OVERLOAD
* NOT OUT OF THE WOODS
* ON THE CALENDAR
* CALLING ALL STUDENTS!

The long period of Royal mourning is reaching its sad conclusion. This week the IEA, which abandoned public comment out of respect for a time following the Queen’s death, has been back in action as political news and speculation resurfaced.

The new administration includes several members who have been sympathetic to the IEA’s concerns over the years, and we have hopes that some of the ideas we have pioneered or advocated may have some influence. We remain, however, politically neutral and will be sure to criticise government policy wherever we think it wrong or misguided.

For instance Andy Mayer, our energy expert, has been critical of what we know so far of the energy price freeze. Andy, and other colleagues such as Julian Jessop, feel that support for poorer households and businesses should be more targeted. Holding down prices does nothing to restrain demand, something which we need to do as winter approaches.

More positively, Christopher Snowdon has welcomed the speculation that the government may begin to roll back the ‘nanny state’ by abandoning some of the restrictions associated with the anti-obesity drive.

On TalkTV ([link removed]) , I discussed with Jonathan Portes the suggestion that Chancellor of the Exchequer Kwasi Kwarteng may scrap the restrictions on bankers’ bonuses which were introduced by the European Union following the financial crash. These restrictions now serve no useful purpose and their abolition, while having little effect in the short run, could conceivably induce some further investment into the UK in the longer term.

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I also pointed out that the government’s willingness to push this through will be an indicator of its seriousness about deregulation. If instead it backs down because of the optics associated with possible increases in bankers’ pay during a cost of living crisis, it will send out a worrying signal. Ending government restrictions on pay has no cost to anyone. By contrast, other suggested deregulation – in fracking, planning restrictions and employment law, say – will generate losers as well as winners. Backing down when there are no losers makes it less plausible that the government will persist in more important areas when there is real opposition.

Next week there will be a ‘fiscal event’, where the Chancellor will deliver a mini-budget which will be keenly watched. We will be looking for announcement of tax cuts, more details on policies to mitigate the cost of living crisis, and a clear strategy to promote growth and productivity increases. Look out for IEA responses in print, online and on TV and radio.

Professor Len Shackleton
IEA Editorial and Research Fellow

A NEW DIRECTION?

In the lead-up to, and following the appointment of the new Conservative Party leader and Prime Minister Liz Truss MP, IEA Director General Mark Littlewood appeared across the media to discuss Truss' profile, the challenges she will face, and her strong-held views on free market economics.

He spoke to CNN's Max Foster on College Green (above), BBC News ([link removed]) , BBC World Service ([link removed]) , BBC Breakfast, BBC Good Morning Scotland, BBC Radio 5 Live, BBC Radio 4, BBC Radio 2, GB News ([link removed]) , talkTV, Times Radio ([link removed]) , ITV News, German network ZDF and Danish TV.

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Mark also took part in a short film with Gary Gibbon of Channel 4 News on Liz Truss' relationship with the Institute of Economic Affairs. You can watch the clip here ([link removed]) .
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And, in an exclusive video for the IEA YouTube channel, Mark gives his thoughts on Truss' character, principles and future policy direction. You can watch here ([link removed]) .

REGULATION OVERLOAD

As Len mentioned, it was reported this week that the new Chancellor of the Exchequer, Kwasi Kwarteng MP, is considering scrapping a raft of EU-imposed regulations, including the cap on bankers' bonuses.

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In his interview on TalkTV ([link removed]) , Len argued that the Chancellor "should ignore the naysayers and just plough ahead with this. If you can't deregulate in this area, you're never going to be able to deregulate anything."

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Quoted in City AM ([link removed]) . Len noted: “A continuing cap on bonuses will over time add to the difficulties of international recruitment and undermine the competitiveness of the UK’s financial sector, one of our few clear sources of competitive advantage (and, incidentally, huge amounts of tax revenue)”.

IEA Acting Director of Communications Emily Carver also appeared on LBC to discuss the move. Listen to a clip here ([link removed]) .

IEA Director General Mark Littlewood spoke to The Times ([link removed]) about new Business Secretary Jacob Rees-Mogg’s commitment to cutting red tape.

Mark noted that Rees-Mogg is “instinctively opposed to heavy-handed regulation . . . He once observed to me that if he was seeking to set up Somerset Capital today, he’s not sure it would have been possible or viable due to the sheer growth in financial regulation over the years.”

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There were also reports out this week that the new administration may launch a review into England's anti-obesity strategy, including 'junk food' regulations. Writing for The Spectator ([link removed]) , IEA Head of Lifestyle Economics Christopher Snowdon highlighted the failures of government measures to tackle obesity.

On the sugar tax, Christopher said: “Obesity among both children and adults has gone up since it was introduced in 2018, but the health lobby does not consider it to be a failure.”

And, quoted in the Daily Mirror ([link removed]) and The Sun ([link removed]) , Christopher asserted: “Scrapping policies that make food and drink more expensive during a cost of living crisis is a no-brainer. The sugar tax has achieved nothing and the ban on volume price discounts will hurt everybody."

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On BBC Radio 4 ([link removed]) , IEA Head of Public Policy Matthew Lesh further questioned the efficacy of nanny state regulations, noting: "The evidential basis for these interventions is extremely weak. It is not clear that they are reducing obesity."

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And, IEA Chief Operating Officer and Energy Analyst Andy Mayer discussed the new administration's decision to freeze energy prices on BBC Scotland ([link removed]) .

While Andy acknowledged the political appeal of such a move, economically "it's a bit of a disaster that's being attacked from both the left and the right."

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Energy policy was also the topic of this week's IEA podcast with Matthew Lesh and Andy Mayer. They discussed the government's cap on energy prices and possible free market alternatives. You can watch here ([link removed]) .
NOT OUT OF THE WOODS

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Inflation data out this week showed a fall from 10.1 to 9.9 per cent in August. Writing for The Express ([link removed]) , IEA Economics Fellow Julian Jessop welcomed the drop, but reminded readers that "the long period of very low interest rates, and money printing under the policy of "quantitative easing", has added fuel to inflation and allowed inflation expectations to take off."

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And, looking ahead to next week's meeting of the Bank of England's Monetary Policy Committee, Julian spoke to The Times ([link removed]) about the need to raise interest rates to lower inflation.

Julian argued: “The Bank has more work to do to get inflation back down to the 2 per cent target. The Bank’s monetary policy committee therefore needs to be bolder to restore credibility. Raising rates by 75 basis points at the rescheduled meeting next week, rather than the expected 50 basis points, would still leave rates at the historically low level of 2.5 per cent.”
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FOR THE CALENDAR

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IIMR Webinar Series... The Institute of International Monetary Research, based at the University of Buckingham, is hosting a series of webinars in October.

The first, taking place on October 5th, will feature Charles Calomiris of Columbia Business School on the question: Does the Fed need a tighter monetary policy rule and Congress scrutiny to restore price stability?

On October 19th, Pedro Schwarz of Universidad Camilo José Cela will discuss: Monetarism in an historical perspective: why is it not fashionable anymore?'

If you are interested in attending either of these events, more information can be found here ([link removed]) .

CALLING ALL STUDENTS!

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The IEA's Oxbridge Training Day is fast approaching. The event will be held at the IEA office in Westminster and will take place on 21 September 2022 from 1.30–4pm. The event is free to attend and participants may join virtually or in-person. For more details on the event, and how to attend, click here ([link removed]) .

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The November Teacher Seminar is also being hosted at the IEA office. The event will include presentations from IEA researchers on issues related to the academic syllabus. The focus will be on the history of economic thought, whether forecasting makes sense, and the history of the government debt crisis.

The event will take place on 2 November 2022 from 10am–3.30pm. You can find more information on how to sign up here ([link removed]) .

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