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This paper investigates whether movements in index-linked government bond yields are correlated with movements in medium-term GDP growth rates in the way one might expect from theory. The paper finds that movements in UK ten-year index-linked gilts can now be seen to have been highly correlated with movements in average ten-year GDP growth (a relationship that has not been obvious until the recent recession). As theory implies should be possible, we appear to be able to infer an excellent forecast for the ten-year ahead growth rate of the economy from the yield on index-linked bonds. When we apply this model to current data, the forecast growth rate is markedly lower than that produced by approaches such as those used by the UK Office for Budget Responsibility.
Europe Economics provided analysis for the Open Europe report on safeguarding the UK's financial trade in Europe. Open Europe argues that the Government must seek to safeguard the economic benefits to Europe and the UK offered by the financial services sector. We contributed to the quantification of the impact of financial centres and financial development on growth.
In a paper for Open Europe, Europe Economics considered the pros and cons of the European Union setting financial services regulation to apply to the UK. It is argued that some of the most material reasons why EU setting of financial regulation might have been to the net benefit of the UK, are unlikely to apply over the next few years.
The European Commission (DG Justice) has published a major empirical study carried out by Europe Economics on the problems that consumers experience with digital content services.
Europe Economics is pleased to have contributed to the evaluation of the National Children’s Bureau Young Inspectors Programme. This work was carried out under the auspices of Pro Bono Economics. The report includes both quantitative and qualitative assessment of the benefits of the scheme. This was a great opportunity to develop the use of economic evaluation techniques in the charitable sector.