Messy Economics

Paul Johnson (1985 PPE, Honorary Fellow), Director at the Institute for Fiscal Studies, was ‘examined’ by Tim Jenkinson, Professor of Finance.

On 17 January 2023, our Keble Conversations series returned to London to a captive audience and a full house at Wallacespace Spitalfields. This was the second attempt to hold the evening, the first being delayed due to the publication of the budget in November.

In a nod to their Oxford roots, Tim Jenkinson, Professor of Finance, examined Paul Johnson (1985 PPE), Director at the Institute for Fiscal Studies and author of the Sunday Times bestseller Follow the Money (“Gripping and horrifying…witty and brilliant. Buy it” The Times), on how the government raises and spends a trillion pounds a year.

The exam questions included querying how the country got into this mess, how to get out of it, and, indeed, if we are all doomed. Paul’s responses did not paint a rosy picture. Incomes and earnings have been growing more slowly than at any time since the industrial revolution and the outlook for economic growth remains subdued to say the least. Meanwhile, a combination of stagnant earnings, zero interest rates (until very recently) and rising asset prices have hit the younger generation hard. The government faces the awful combination of the highest taxes ever, high debt and, apparently, inadequate resources to spend on public services, driven to this position by low growth, the demands of an ageing society and high debt interest payments.

All that said, Paul was clear that we are not powerless in the face of our economic difficulties. Governments can make a positive difference by focusing on, for example, education, infrastructure, tax reform, planning reform, an effective competition regime, and a positive relationship with the European single market. He stressed the need for political stability and competence.

As always, the audience was ready with some cross-examination of their own and, given the chance, would have stayed to ask questions for many more hours. Conversations continued over drinks and snacks before wrapping up the evening.

Our next Keble Conversations will be between Keble’s Warden, Sir Michael Jacobs and Selwyn’s Master, Roger Mosey, and will be moderated by BBC Political Correspondent Ione Wells (2014), winner of the Rising Star of The Year Award (2023), on 3 May. Book your tickets here.