More Than Just Brexit

is definitely not coming earlier this year. In fact, for the many schools that have to close on election day to be used as polling stations, Christmas may not happen at all. Up and down the land, Carol concerts and Nativity plays have had to be rescheduled or canceled for this snap election to go ahead. Some parents are very upset others Anyway, if that's all you want to know about the UK election, you should probably turn off now come back next week when we'll be talking about the

future of India, among other things. But if you do want to know what's at stake in this UK election and what the lessons might be for Brexit Britain or Donald Trump's America for that matter, this episode is for you. At the end of the show, I'll ask our UK economist Dan Hansen how he thinks the economy will be affected by the election at b Brexit. But first we have a special debate I chared earlier this week with the heads of three extremely well respected independent think tanks

here in the UK. It's been their job the last few weeks to tell fact from fiction in this highly polarized, rather febrile election campaign. We talked in the debate about what the two main parties were proposing in their election platforms or manifestos, what the key dividing lines were, and whether and how much any of it could really be believed. Lots of politics and policies and smart debate. No politicians,

You're going to love it. The Institute for Fiscal Studies led by Paul Johnson, the Institute for Government led by Bronwyn Maddocks, and the UK in a Changing Europe there by Alan Meno, have played a massive role already in the truth telling battle. You're gonna get lots of truth telling this evening also questions from the audience here but also importantly from the from online. I have them all here. There's lots of questions that we already have. Most of

them are worth about half an hour's discussion. At least so I apologize in advanced for people, um if their questions aren't fully answered, like is there an answer to the social care crisis? Um? But they really exciting news is that this has been more broadcast online and will also be on the Stephonomics podcast, which is available whenever wherever you get your podcast. M Paul, I think we

will have to deal with economics first. If you step back, can we can we put look at to briefly look at where we are in terms of what the parties are suggesting, and I think more importantly put it into some context. Well, we've certainly got big differences between between the parties. I think it's worth starting actually thinking about the what's in the manifestos just by saying that everything about the economics and public finances in the next five

years is incredibly uncertain. Whoever wins and whatever happens with Brexit, there's lots of uncertainty around what impact that's going to have on the economy and the public finances. Don't forget, as we often do. There's a big, wide world out there, which economically speaking, was doing pretty well until a couple of year and until earlier this year, and we lost out on a lot of that growth, but it's slowing down.

We've got trade wars between China and the US. We get a recession about once every ten years, and it's about ten years since the last recession. So whether we get another one over the next parliament remains to be seen, and if we do, of course quite a lot of

stuff might get balloon. Well, off course, what what the Conservatives saying, well in their manifesto, remarkably little, I think it's fair to say on public finances, spending and tax I think we said I think we'd certainly stand by that that if this had been a one year budget, we'd have described it as pretty modest. As as as a program for government, it's really for five years. There's really remarkably little in it. I mean, so spending in a couple of years time will be about thirty billion

more than it is today. So in that sense, austerity at an end, no further cuts planned um and public service spending a little bit higher by three than it was in twenty ten. Not well, that's an awful lot to write home about. After more than a decade, the public service spending outside of health will still be way down. On where it was fifteen percent lower three on those plans than it was in twenty ten, so some real increases, but in a sense those were all pre announced and

there's very little additional in the manifesto. You take all of that at face value and you get the deficit, the debt pretty steady roughly where they are, which is pretty much what you might think of most of the Conservative manifesto bar Brexit, which is steady as she goes. Not much change, of course, risks around what would happen as a result of no deal if that's where we end up in a year's time. Labor couldn't be much

more different. Um the scale of the tax and spending plans, it's hard to overstates they really are extremely bit so, just to throw some big numbers at you, um, current

spending increases eighty billion a year. This is on top of the thirty odd billion already coming through investment spending, and an extra fifty five billion a year on average over a parliament has doubling government investment and the tax increases of eight billion a year by all British historical standards, astonishing and unprecedented levels of tax and spending increases It's

important to put addly in international context though. If you take the overall spending plans, they would take us from relatively low by Western European standards to rather more average by Western European standards as tax and spending as a fraction of national income, so unprecedented in UK history, but not unprecedented in terms of international comparison. Um on the on those spending plans, where's all that money going? I think the answer in the sense is it's largely going

to a reimagined and more universal welfare state. So free higher education, free childcare, free personal care, free prescriptions, um and free, quite a lot of free TV licenses, free quite a lot of other things. This is actually not a manifesto focused on the poor. There's very little in there actually to undo the welfare cuts we've had over the last ten years. Probably less than a quarter of

the welfare cuts to be reversed. And of course the main beneficiaries of the things that I just mentioned are those who currently are high earning graduates, are are older people who actually have some assets and so on. But actually, I think despite these big differences between labor and conservatives

on their tax and spending plans. I think there's one thing in common, which is actually we don't really know what they would do, because it's not I think clausible that within a single parliament Labor could do all of the things that I've just described and nationalized water power, broadband, royal mail and bringing their inclusive share ownership SKI and as I say, double double investment spending and all the

other things that they're describing. There's a list and aspiration which might be achievable over a couple of decades, but

certainly isn't achievable over a couple of years. So I think actually with both Labor and Conservatives ones and left with a lot of uncertainty about what actually they would do um in in their time, in their time in government, where would where would Labor's plans leave us in terms of the public finance as well on their own on their own figures, borrowing would something like double um too about four percent of national income, the debt would national

debt would be rising. And that's all assuming that the economy continue to grow as currently currently projected. But I think the big I mean the big story here is a huge increase in the role, scope and scale of the state not just in terms of its tax and spending, but in terms of nationalization, which would take more than five percent of private business assets into the into the

public sector. A minimum wage actually which were directly set from Whitehall, the wages of a quarter of private sector workers, so high as it's set relative to the sorts of wages that people learned. So a dramatically different view of the role of the state compared with compared with the compared with the Conservatives, and a big change from where we've ever been. From wind your the in student has done some fantastic stuff almost daily on the public services

piece of the election debates. I mean, it does strike me that although we talk about we've talked about the sort of big macro numbers, actually what's striking about this election is not the not the macro debates that we've tended to focus on in the past, but actually real disagreements about the cre economic level, about the basic principles

for policy. Absolutely, let me say two general things about this election and then dig into some of the detail and pick up on these points that Stephanie and Paul are raising. And the first is that this is a real battle of ideas. We've had something of a consensus for thirty forty years about how to run government, no matter whether Labor or Conservatives have been leading that government.

And it's about driving for more efficient use of public spending, bringing in some of the techniques from the private sector, like targets and a certain sort of managerialism. But you've even abroad consensus there and that the government was there to work with the private sector, and the boundary might go back and forth a bit, but the techniques for doing all that would would would get better and better. And this is um and certainly the challenge from Labor

in this election is something very different. They don't see it that way, and they have on to great length, great length and the manifesto to spell out just how differently they see things. And while we can talk about the individual policies, I think we have to capture as well that this is really a different worldview about how government works, as well as the size of the state. And the second thing, picking up on a point that

Paul made, is that they have promised too much. The Conservatives have promised too much with Brexit ah their big idea if you like there, their manifesto is not entirely devoid of things, because that sits there right in the middle.

And yet what they've promised in terms of getting that done, and the time scale on which they've promised to do it, and the fact that they're objective depends on the European Union, not just on the European Union, but on the unanimous approval by twenty seven different European countries, makes that extraordinarily hard. That's them. Labor has, to its credit, spent obviously a great deal of time and many many pages in spelling

out in detail what it intends to do. Um. The sheer bureaucratic volume of what they try to do, I think we need to remind ourselves of it. UM take them years, possibly simply to create the three new departments. They want things that are in there almost as an aside, like abolished universal credit, to be enormously disruptive and take a couple of a couple of governments to do, and I'm not sure they'd be well advised to do it.

And that's before getting onto some of the big planks of what they want to do, like renationalization and so on. So you know, they've got enough in there for many, many governments. And this question of prioritization, I think would be particularly forceful director directed at them on ownership, which matters a great deal to labor Um. We can see from this manifesto labor as really set out it believes

that it matters who owns things. It matters that if the government owns things, it matters if workers own things, and it is clearly after a transfer of power UM through this ownership. I think it has yet to make the case that government ownership of many of the problematic things it has alighted on, for example, the railways would be dramatically would lead to a dramatic improvement UM. These These are problematic for many reasons, but they were under

government ownership before. It is absolutely true that in some cases UM priadization has not helped. But the fault I think has lies more easily, is more easy to identify the faults with a regulatory regime, and that would be an easier starting point then simply pulling the whole lot into government hands again. And there is not in many cases capacity to man the edge of these things in the way that there was in the past in government, and to say that all these problems will suddenly go away.

They won't they will be more easily pinned at the

door of ministers. Allen's going to talk much more about Brexit, but I would just say I'm at the Conservative deadline of the end of the year is so tight, you preparing so thoroughly already for those negotiations, and you only have to scaff in a few words like fish and Gibraltar to make the whole thing very complicated and difficult for any new government UK government to accept that there is a real possibility if we have a Conservative government here,

that we have another no deal cliffhanger, though the room for compromise that both sides showed might lead us to hope that that could be brushed away on labor side, This timetable of six months to get it all done, including a second referendum, I honestly think is for the birds. It just um they would have to be bringing in legislation right away for a second referendum without even knowing what the question was, because they wouldn't have done the

deal yet. So I think they've been unrealistic, both of them in different ways on this, And I just come back to that point of the battle of ideas. I mean this, these are two very very different expressions of how government works and the role of government plays in fixing things and by extension, the role of freedom for individuals or businesses. It is a battle about liberalism in a way, and we can express some of this in numbers, um the sheer amounts of money going to one thing

or other, but it's bigger than that, um. And so even though this has been called the Brexit election and the public services and wall of money election, I think it really is a battle of ideas, and I want to I'm going to come back very briefly on that, because I do think it's interesting. It hasn't come out

of nowhere, this very different approach um. And of course many people would say it's directly a throwback to a previous time and previous Labor Party policies, but that how much do you think it's a reflection on the failures of that sort of managerial approach that was in a sentence for all these years that throughout this period, not just recently, throughout this period, quite significant majorities of the public have been in favor of renationalizing quite large chunks

of the privatized industries, and certainly younger people also have a perception that things have that that managerial model certainly didn't change enough in response to the financial crisis. I was struct there was a very good Business Week piece about trying to explain to the Business Week audience and the Bloomberg audience this week how Corbin had sort of got so far, and particularly about you know, how radically he was, but also how particularly younger people supported him.

And he's that says they not only have zero problem with his desire for an activist state, they see it as the sole remedy for system that's still forcing average people to pay for the sins of the financial industry and the crash. I mean there is a bit of some of this is is because there was a failure to change. I think that's exactly right. And I think it's it's it's older than the financial crisis itself. Um. And I think some of the privatizations, you know, it

worked partly. Um. You can argue it's not very popular that the railways were even worse before and carried many fewer people. Um. And and that beat has in a lumbering way improved itself. H and so on. And I think that is right. But the regulators also, to my mind, have struggled with a very difficult job, not just a price regulation, but sometimes of content regulation in the case of Offcom. They've got they've got very very difficult jobs.

And there is not a great deal of support rightly in my view for kind of unelected technocrats presiding of these things that really affect people's household bills and so on. So I think a lot of the challenges right and when you come to the generational imbalances, um, we can have this, there would be a whole seminargist on the

definitely be very expert on. But what the responses to the financial crisis did in terms of the exacerbating the problems in the housing market and exacerbating our stocks of wealth for some some parts of the population easily caricatured. But but there is enormous sting in that for the generational divide, and I think politicians have been very very slow to recognize that and to address some of the particular problems for example, the housing the housing market, UM,

and so these things are built up. But state where the state ownership is actually a remedy for all of these, I think is an entirely separate argument along that I think Labor has has really yet to make the case for let alone to win ann and men not um. Bromwin said, this was supposed to be the Brexit election.

It is striking that it has not been as dominated by Brexit as we might have expected, and I guess some people would take that as an example as a sign of these other real debates being quite important to people. I guess the other the other reason might be that people just don't fed up with talking about Brexit and don't know who to believe, because, as brom Win says, there is so much unreality on both sides on this topic. What do you think well? And yet at the same time,

people have very strong feelings about Brexit. That mean that, you know, if you look at the survey evidence, far more people in the British Social Attitudes Poll, of the survey that's taken are now very interested in politics and whatever the case before, we can expect I think pretty high turn out, not just because people are motivated because we have a new registers so are counting fewer dead people now, so the proportion is going to be naturally so,

so I think people are motivated by Brexit I mean the problem is, I think, are there are the specters as as Bromwin hinted at this, that they're being offered, aren't all together straightforward or necessarily honest. On the point about and I'll come onto the manifesteds in a minute, but on the point about whether or not this is a Brexit election, I suppose the proof of the pudding

is going to be in the eating. Now, seventeen was meant to be a Brexit election, but if you dig into the numbers, then actually social class as ever was the primary driver of how people voted. So there was

a Brexit impact, but it was quite limited. And what we don't know this time, and I'll come back to this in a minute, because it matters is whether or not new Brexit coalitions will take shape, whether in particular the Tories come to power on the back of a Brexit coalition that might win the majority, but I might actually make it very very hard for them to govern because creating a set of economic policies for that Brexit coalition is going to be challenging, to say the least.

But on the manifestos, if I start with Labor, I mean the Labor offer is on the surface quite simple. We're going to go to Brussels, we're gonna negotiate the deal, we're gonna come back, gonna have a referendum, and as bron Win says, that will take us six months and then we'll move on to other things. Now there are holes in this, I mean not least in the fact that it's far from clear what Jeremy Corban is going

to ask for in Brussels. There are some wonderfully ambiguous phrases in the manifesto joined UK EU Trade Deals is one such phrase. If by joints the Labor Party mean that EU will negotiate them and we will have to apply them, then I think the EU could probably live

with that. If by joint the Labor Party means we're going to get a real say over them, I suspect Brussels might turn around and say hectually no. So that's one issue where there's going to be a little bit of ambiguity, and the other is on the notion of alignment with the Single Market. What Labor don't say is how much. So the scale of ambition is very very unclear. Uh. And of course, when it comes to the political practicalities

of the labor position. There's very little escaping from the fact that even were Jeremy Corbyn to pull this trick off, to go to Brussels renegotiate a deal, and there are reasons I think to wonder whether he'll get that far, which I'll come back to in a sect, But he will come back and then find a significant amount of his own cabinet, of his own parliamentary party, of his own party membership, and of his own electorate will then go and campaign against what he's just done, which at

a minimum is not a good look. I mean, you know, think back to six It's not a good look for a prime minister to have his deal trashed by his own party. So there's there's instability inherent in that anyway, So you know there there there are there are issues around what what what labor is offering. I personally think it will be very very hard for a minority labor government because that is the only source of labor government.

We're going to have to get the necessary legislation through Poland my hunches as they try to do this and run into the choppy waters of a Lib Dem party, half of whose MPs will be people who left in order that Jeremy Corbyn didn't become Prime Minister of an SMP that has its own list of demand, I wouldn't be at all surprised if we weren't to have another election before we got anywhere near a referendument. Will see what happens. I was going to say that to last

actually uh turned to the Tories. I mean, there are three things that concerning about the Tory manifestoized, but well, one thing that doesn't concern me is I think I would say that if the Conservatives come back with a majority of one, they will get Brexit done by the end of January, because I'm pretty certain that no Conservative MP returned in this election will vote against any Brexit motion in the House of Commons until we've left, so I think they only need a very very small majority

to get us over that line. Then, going back to one of the things I said earlier, if you imagine a Tory party in Parliament that involves not just traditional Tory MPs, but you know, a Tory MP for I can hardly say this a Tory MP for Wakefield, for Bolsover, for West Bromwich, for Walsall all those people once they've been elected and got over the sort warm Glowe will be thinking, hang on a say, the Prime minister's plan for Brexit is to make our economical relationship with the

European Union so thin that a significant number of my constituents might lose their jobs Before I'm up for re election, those pressures will be real inside the Parliamentary Conservative Party, I think quite quickly. So in a sense, the more successful Boris Johnson's electoral strategy is, the harder it will be to deliver the sort of Brexit he's been promising. Just putting you on the spot because there's a question

from online that does just that. What is harder to do negotiate the future relationship within the year, or negotiate a new withdrawal agreement and hold a referendum within six months if you're just kind of you know, on the implause and bombitter which which which one is kind of off the scale and which one is or they are they both? Well, they're not neither easy. The trade. I remember, it's not just the trade that depends the scale of

our ambitions. I mean, one piking omission from the Tory manifesto is any mentioned at all of security corporation with the European Union, and let issues around military corporation, round data sharing for police collaboration are incredibly important. If you want to do all of that, and you want to do it well, you're not going to do it in a year. So negotiating a good, broad, thorough relationship with our nearest and largest trading partner is not going to

take the year, is going to take longer. So that's that's the most implausible. But the other one is pretty I've been looking through I had been paying attention, but I'm also looking through all the many, many questions meant, some of which came in before before we started talking. Others are trying to prove that they are watching by noticing that Paul Johnson's wearing red sox question always well, there you go. Actually they make that comment as well,

it's your's. There's quite a few about what the impact is going to be of all these policies going to be on productivity, because that is something that many of us have talked about, indeed wanted politicians to focus on

over the last few years. And it struck me that there's a kind of broader thing about growth, you know, you see I see a lot of the investment banks and independent economists analysis of different economic scenarios after after the election, and it's quite striking that they all they can't really get around the fact that growth is they would expect the economy to be larger and growth to be faster under the Labor Party because they are in

putting the fiscal policies the stimulus of the next few years, they're also looking at the very least the assumption is either that you might not have Brexit after second referendum, or that you would have at least a softer form of Brexit. And of course you can see that that kind of goes against the grain because they also know that there are all these policies that they might imagine would be bad for growth. But traditionally we've been we found it quite hard to sort of model in short

time for forecast those kind of dynamic effects. So how do you think about the growth in the relative growth impact of the manifestos if some proportion of these policies are implemented. Yeah, that's a very in a sense, that's the most important, one of the most important questions, but it's an incredibly hard one m to answer and there are big risks and with with with with both of

the main parties. So if you look at if you look at the sort of sort of take the Conservatives as the sort of baseline as it were, and assume that they achieve something like the kind of Brexit that they're they're looking for, then most of the forecasts are for pretty miserable growth over the next five years one and a half cent a year um something like that, which is which is well down on what we would

normally have expected over the last fifty or sixty years. Uh. And you know that's associated with a combination of the costs around Brexit and just a continuation of very poor productivity growth that we've seen for the last for the last decade. A couple of people have asked this, are our institutions of state, civil service, judiciary, etcetera strong enough to withstand the assault from politicians? And what can people

do to help? I mean another version of this, in the sense, which is more specific to Whitehall, is is the concept of an impartial civil service likely to survive this election and the post truth era. I say severything. I mean, first thing, actually, levels of public trust are quite reassuring. I remember looking at the time of the Supreme Court judgment of the figures on trust in the judiciary, and it was I think near eighty percent or something.

There are obviously challenges to our institutions. There's the challenge of a sort of thinly disguised ambition among some round the Prime Minister to politicize the civil service. There's the horrible way in which individual civil servants were singled out and named by politicians that I thought was shameful. Ah. There is the fact that you know, at least and I say at least because I think it's more but

just to peopolite. Let's say at least three of the parties in this election are running on what you could call populist platforms. So we have a Prime Minister running on a platform of the people versus the Parliament that failed them. You have a Labor Party running on the platform of us versus the establishment that rips you off. And you have Nigel Farage. And you know that is a danger to our institutions in the sense that you know,

this sort of populism isn't all that helping. But I still I'm still one of those people that thinks we're in the middle of what is a political rather than a constitutional crisis as yet, and I think this gets

resolved when we get a majority government. Very interesting you say that about a majority government and what it could do, because one of the other questions that was more fundamental was whether Britain's concept of liberal democracy could survive either Labor or Conservatives winning an overall majority in the next election. It sounds like you think it could actually be a

step in the right direction. But Paul, if you have a majority, when one thinks about when you talk about the implausibility of some of the of the promises on the labor side, but also the lack of clarity on the Conservative side around the implications of some of about Bexit and other things, there are many people in this country who are trying to vote for a hung parliament,

even though the system makes it very difficult. Um, without putting you too much on the spot, um, do you all of you actually do you fundamentally think we would be in a better or worse place with another round of hung parliament or whatever the outcome, We'd be better with a majority parliament. One thing that majority on either side would tell us, which I think we just don't

know at the moment is what actually are their priorities? UM, So you know, I think you know, it is implausible that the Labor could implement its manifesto in a parliament. It is not implausible that it could put us on a path towards implementing it over two or three parliaments and make big changes within one. UM, But we don't know how they would do it, what they would do first, what they'll prioritize, or any of those things. So what the world would look like in five years time under

that world, we don't know it. Equally, we don't know what a Tory majority would do because their manifesto says so remarkably little. So I mean, at least a majority would would would tell us what one side actually wanted presumably um and what it's what it's actual priorities were. Either either one winning a majority would clearly, you know, if labeled one a majority, we'd have to be a very different country in five years time to the country

we would be if the Conservatives one a majority. But I think it also asked the question about what what is then the impact on the next election, And going back to what Anan was saying, I mean, if the Conservators win a majority by winning a bunch of these seats in the Midlands and the North, and the economy doesn't look too hot in five years time because of a particularly hard Brexit or what have you. You can imagine that we swing one way this time and then

swing very dramatically the other way next time. And the same may or to be true of labor towards towards Conservatives. So I suppose one of the risks, as it were, of majority on either side is you get lots of change which we don't know which were direction it will be inexactly or where it will be this time, and then the next part of just undoes it again because of this kind of because of this polarization and where

where the parties are. So I think the you know, the going back to what bron we were saying that our electoral system and you know, in a sense the we the in party democracy, which I think is actually kind of you know, driving this polarization within the electoral system that we have. I mean, you could imagine bigger swings Parliament to Parliament if we get majorities at each in each case, which itself could be our supposed destabilizing.

Although the system doesn't work very well without majority government in parliament, all kinds of conventions of that parliament don't

work very well. I'm not sure that British people will feel that if we do have this swinging around, that they are very well represented by these majorities getting in Alternately, and Brexit has proved a very good case of that of the narrow losing minority not feeling that their views are represented, and possibly some of those who voted um leave not feeling that Boris Johnson's version of le represents

them either. And I think going to your question Stephanie, about you know, is our version of liberal democracy going to hold up. I'm not sure without a change in the voting system that people are going to feel represented by this in the way that they would like to. And there's that potentially accelerated by having having another unclear result.

I think it's happening anyway. I think both the majority that charges for something that much of the country doesn't want or hung parliament that just makes everyone feel like we can't stand anymore of this can do it. But a hung parliament would at least force the question of whether a change in the voting system was necessary because it's that is such a nice clear ending, and we have run out of time. I will leave it there.

We have had clarity, We've had rigor we have, even if you look very carefully, had crumbs of optimism here and there. Whether whether I come away with a reason to have a spring in my step as I approached the polling station in a little over a week's time, I'm not sure, but thank you very much to the truth tellers, Paul Johnson, Bromomatics and Anna mental m. Now I'm going to have a quick word with Dan Hanson, who's our senior UK economists who actually came to Bloomberg

a few years ago from Her Majesty's Treasury. No less, Dan, we heard from the experts. They're a lot about the long term impact on the economy of various scenarios for Brexit and for the election, But you've been thinking about sort of a more short term outlook for the UK and how it could be affected by the election. What should we expect. Yeah, that's right. So it's no secret that elections in the UK have become increasingly hard to predict, and we only have to look back to to be

reminded of that. Um So, with that in mind, as you as you just said, we've been thinking about scenarios and we've been thinking about three in particular. The first is that Boris Johnson gets the majority he's looking for, which most which if you looked at the polls, you'd say that still that was the most likely. You look at the polls, you look at bookmakers odds, they'repending about chance on it. And for the economy, we think that would mean a few things. We think there would be

some modest pickup in business investment. We don't think all of the investment that was lost over the past three years going to come back. One of the big questions for the first six months of any new Tory government will be will they extend the transition period, the Brexit transition period. That question is going to come up in the summer, at the end of June, because there's this point back, can you really do the whole trade deal in twelve months, which is what their theory they're planning

to do. Theoretically, yes, but experience shows that that that's highly highly ambitious. Um. The other thing you've got to look out for for the economy and growth next year's fiscal policy. We know that fiscal policy is gonna be loosening quite significantly. A big question here is will the Tories be able to find all these investment projects, bring them online quickly and will they provide a real return?

I mean, there's there's likely to be a demand boost because you put people in employment, you pay them wages, they spend the ash. But will they have a long term benefit these projects that are coming online, And the Bank of England's going to look at that. So if you have you have a have a conservative majority. Still got uncertainty around Brexit. What does that mean for for interest rates? So of you is that it means stay on hold. They've been on hold for a while. I

mean I think they've they've moved in a dubbish direction. Um, that's pretty clear. But I think with the combination of some pick up We're not talking about a big, big increase in business investment, but some pick up in business investment and a pretty big fiscal policy loosening on the horizon. Remember, the Bank England looks over three years and they hit trying to hit inflation in two years, hit the inflation target in two years time. Um, those two things together.

We think balance of probability, the next move will be up rather than down. But they're going to wait for that, for that cyclical boost to come through, all right, And that's if you have a full majority. That what as the bookmakers would would predict now, which is a Conservative majority under Prime Minister Boris Johnson. But the polls have narrowed a little bit, and as you said, they've been wrong recently, particularly because Brexit kind of scrambles the numbers

in various ways. Lots of people might be even more than usual, might be voting tactically in some of these places where they want people who don't want to see Brexit so quickly. What are the other outcomes and is it if you're stepping back, what is it. Is it going to make a real difference to the economy in

the next twelve months. I think it will. I mean that the other outcome we've been looking at is if we have what we have now, where you have a Tory minority, they have the most seats in Parliament, but they can't form a government because no one else wants to support them. They don't have the support the d UP for example. But it's also the case that all the other parties can't form a government, and certainly a

stable government, a stable what would be a coalition. And in that world, we would expect the economy to perform pretty similarly to how it's done over the past twelve months,

which is not very well. Yeah, it's you'd have a you'd have a world, we think at least where growth would stay around the point two percent quarter on course mark that's point eight percent annualized growth, and we think at least the trend rate for greasing the economy is about point four percent or one point six percent annualized. So the Bank of England's looking at that the world. This is a world of entrenched uncertainty and it's a scenario they have warned about and why a couple of

policymakers in November voted for a cut. If that begins to come to fruition, we think it's more likely than not that they'd actually loosen policy. And it's so funny that the things that add to the list of things to be uncertain about. Remember, we've got the Bank of England Governor Mark Harney, who many people will have got to know over the years. He was supposed to be stepping down. We'll he's supposed to have stepped down loads of times, and he's each time he's had to have

an extension. He is supposed to be stepping down at the end of January. We don't know who's going to replace him because people were waiting. We're waiting for this election. UM. So that is another thing that will be uncertain about. I guess even if Labor against the Odds were able to form a government, maybe they don't win a majority, but a kind of gang together with these other remaining party these remain parties Lib Dems and the Scottish Nationalists

for example. UM. That also means uncertainty because we don't know what we even under that scenario. You don't really know what's going to happen with Brexit anything. So it sort of feels like this is an election that was sold to people, as you know, getting Brexit done and resolving things. Under all three scenarios, the uncertainty affecting the economy continued, and you will have plenty still to do. Thank you, Thank you very much for that, Thanks for

listening to Stephanomics. We'll be back next week talking about India and probably trying not to talk about the UK election in the meantime. You can find us on the Bloomberg Terminal website, app or wherever you get your podcasts, and for more news and analysis from Bloomberg Economics, follow at Economics on Twitter. You can also find me on at my Stephanomics. The debate featured in this episode was

held at the Royal Institution in Central London. It was co hosted by the Institute for Fiscal Studies, the Institute for Government and the UK in a Changing Europe. The show was produced by Magnus Hendrickson and edited by Scott Lamman, who is also the executive producer of Stephanomics. Special thanks to Dan Hansen, Paul Johnson, Bromwin Maddox, Anna Menon, Greg Opie and Bonnie Brimstone. Francesca Levie is the head of Bloombergh podcast