Policy Paper

The New Employment Tax

The government announced the employment tax increase in September adds needless complexity to the tax system, encourages self-employment rather than employment, and hits hardest the labour-intensive sectors that suffered most from Covid. It will encourage a shift away from labour-intensive sectors and reduce the UK's international competitiveness. The levy will add to the squeeze on real household incomes implied by surging inflation and, therefore, subtract from consumer and business spending.

How much risk is the USS taking?

We analyse the probability distribution of outcomes for the USS in the light of conflicting claims about its sustainability in the absence of changes in contributions or in benefits. We find that a substantial investment in riskier assets (equities) makes the average outcome one in which the scheme is comfortably able to pay accrued benefits. But the risk of having far fewer funds than needed to pay existing pension promises is significant and the chances of large deficits is very substantial.

What economic complexity theory can tell us about the EU’s pandemic recovery and resilience plans

A little over a year ago, the EU’s political leaders agreed on an unprecedented fiscal package – dubbed ‘Next Generation EU’ – to aid Europe’s recovery from the pandemic. Ricardo Hausmann, Miguel Angel Santos, Corrado Macchiarelli and Renato Giacon write that economic complexity theories can provide a useful tool for evaluating whether the recovery and resilience plans submitted by EU member states to receive this funding are well-designed.

Quantitative Tightening: Protecting Monetary Policy from Fiscal Encroachment

As we face up to the need to plan an eventual exit from quantitative easing, in this Commentary we consider how to reform both sides of the central bank balance sheet in a manner that will prepare the ground for a contraction in the balance sheet that does not expose the central bank to excessive risk. Post-QE central bank balance sheets have a maturity mismatch, with long term bonds as assets financed by liabilities in the form of commercial bank reserves bearing floating interest rates.

How should the COVID restrictions in England be eased?


Vaccination against the COVID-19 virus began in December 2020 in the UK and by the end of March 2021 were running at 5% population/week. High Levels of social restrictions were implemented for the third time in January 2021 to control the second wave and the resulting in increases in hospitalisations and deaths. Easing those restrictions must balance multiple priorities, weighing the risk of more deaths and hospitalisations against damage done to mental health, incomes and standards of living, education and provision of non-Covid-19 healthcare.

Policy Note: An update to our Review forecast for the November lockdown



We estimate that the November lockdown will contribute to a fourth quarter contraction in GDP in the region of 3 per cent and reduce year-on-year growth from our November Review main case forecast of -10.5% to between -11.5 and -12%.

Reconstructing Macroeconomics after COVID-19: Notes for a First Draft


As a discipline, we have contributed much in response to the global challenges posed by the COVID-19 pandemic. But we also have much to learn about what it implies for our profession. And there are key actions—particularly on fiscal, monetary, global forecasting, prudential, sovereign insolvency, and global early warning—that are needed now.

Projection of demand for Trussell Trust food banks due to the Covid-19 crisis: Quarterly at the UK (national) level

National Institute of Economic and Social Research, in association with Heriot-Watt University