Speeches by Coghlan.

“So you are confident that expectations are not de-anchored yet.”

“Dr Mann, how sensitive is wage growth to unemployment? Could stagflation become a reality?”

“Governor, you talk about inflation expectations. Do you get any comfort from the fact that the MPR indicates household inflation expectations have risen in the short run, but only slightly in the long run, and perhaps they are not de-anchored and therefore rates might return to target in the medium term?”

“Roger Bootle, adviser at Capital Economics, notes that the previous inflation in 2022 was accompanied by a sharp rise in broad money supply, but we are not seeing that this time round. Andrew Bailey, do you take any comfort in the slow growth in money supply?”

“On the specific point about not being broad-based in hospitality and IT, on hospitality, one could perhaps argue that a lot of that has been driven by tax increases and national insurance in a low-margin industry. Perhaps with IT, changes to AI could be driving that sector. Would you think that is so?”

“The discussion on productivity is very interesting. John Van Reenen, who is obviously close to the Government, as a former chief economic adviser, has calculated that the impressive output numbers on 14 May mean that productivity has increased at an annualised rate of 1.6% since the Government were elected, versus 0.3%…”

“But the MPR does note that firms are more likely to raise prices in response to inflation. Could this initiate a wage price spiral?”

“There is one final question from me for you both. Should the Treasury be braver in disagreeing with the OBR on growth forecasts? In the UK, as I am sure in the Netherlands, it gets castigated in the media if it disagrees with the OBR. The OBR is not God, as Professor Elmendorf said earlier.”

“What timeframes do you use in the CPB?”

“Finally from me, we have discussed a lot about the five-year horizon. We have heard that the CBO uses a 10-year horizon and the CPB in the Netherlands uses a four and eight-year horizon. Is the five-year horizon too short? Is it correct? If it is correct, where do you disagree with the Netherlands and the US?”

“I should declare an interest as an alumna of Harvard Kennedy School.”

“Exactly, I thought I needed to. Professor Elmendorf, thank you for coming. The OBR forecasts are based on a five-year timeframe. My understanding is that the CBO uses a 10-year timeframe. Should the OBR consider using a more long-term forecast like CBO, and, if so, why?”

“You spoke about thresholds. Is there a similar concept in the CBO to the 0.1% we are seeing here in the OBR?”

“Has it ever been the case that the OBR’s threshold for scoring growth policy has resulted in the Government delaying or even blocking investment decisions because it does not get the benefit of them in the OBR forecasts?”

“The OBR will only score supply-side measures if they increase or decrease potential output by 0.1% by the fifth year of the forecast. Do you think that that is reasonable? What do you do in the Netherlands?”

“Aghion and Howitt’s endogenous growth theory has shown that policies such as education, R&D and innovation drive productivity enhancements, but they take longer than five years, generally, to come in. Is that a major consideration here? Obviously, against that is also the five-year electoral cycle.”

“How do you respond to criticism from the IPPR that the OBR does not adequately capture the second-round dynamic impacts of public investment, such as where public capital crowds in private investment?”

“Of course, crowding-in can be much higher than 30%.”

“You might have a number of policies that individually are below 0.1%, but in aggregate—”

“Sure, but you get the net present value today of a policy leading out for five to 10 years in terms of gilt yields and so forth. Is there an argument that, if you were scoring them from years five to 10, bringing through policy changes that would potentially impact gilt yields might improve the Government’s fiscal posi…”