As we turn our backs on 2012 and look instead to the new year, there remain many important economic questions that need answering and problems that need solving.
Annually, the Financial Times interviews leading economists to find out their economic predictions for the coming year. This year, Philip Booth, Editorial Director of the IEA answered a range of questions regarding house pricing, employment and the EU.
To what extent will the UK see a sustained economic recovery in 2013?
It will make a weak recovery – a sustained weak recovery, I believe
For how long can rising employment remain consistent with stagnant output? What might give in 2013?
Employment can carry on rising with stagnant output so long as productivity growth is more or less zero whilst the labour market functions well. The financial and energy sectors are hampered by both government policy and structural change and, in addition to this, higher government spending, taxation and a benefits system with incredibly high marginal rates suggest that there will not be a step change in productivity growth in the next year or so.
As far as the economics are concerned, how much should people worry that Britain might leave the European Union in the years ahead?
This is an issue similar to that of the euro in that the long-term and short-term consequences a