Economics Observatory | Insights on the UK and global economy

What would Adam Smith think about today’s environmental challenges?

Adam Smith lacked the language of sustainability, natural capital or intergenerational justice. But 250 years after the publication of his founding text of economics, a central insight reflects powerfully on current concerns: ultimately, the wealth of a nation is what it leaves behind for tomorrow.

Public spending, taxes & debt

National debt and democracy: what has been the UK’s experience?

Many of the world’s leading democracies are struggling with high levels of public debt, rising interest burdens on that debt and slower growth than in the past. The democratic challenge is persuading the public to accept higher taxes or reduced public spending to curb unsustainable budget deficits.

Lessons from history

What was the economic significance of the 1956 Suez crisis?

The Suez crisis was not the cause of Britain’s relative economic decline, but it exposed deep-seated weaknesses: the vulnerability of sterling; the constraints imposed by the balance of payments; and the difficulty of sustaining an international reserve currency with inadequate economic strength.

DATA HUB

New budget, new numbers

The OBR’s October forecasts for the UK are less favourable than March’s: higher borrowing, lower growth in 2027, higher inflation and lower household incomes. Use the drop-down to switch between measures.

Click the chart to see where UK public debt was ahead of the 2026 autumn budget.

Productivity & growth

Have better data solved the UK’s productivity puzzle?

Past productivity trends shape forecasts of future productivity, which drive the fiscal forecasts at the centre of UK policy debate. Unfortunately, the recent revision to measurement of hours worked has barely changed the growth of the measure that matters most for fiscal space: output per worker.

MAGAZINE

Read the latest edition of our magazine here

In 2023, ECO magazine marked the 300th anniversary of the birth of Adam Smith. Now, it is 250 years since the publication of his pioneering book, The Wealth of Nations.

Public spending, taxes & debt

Is the Eurozone heading towards a new sovereign debt crisis?

High yields on government bond in many advanced economies are leading some to speculate about a looming debt crisis. Lessons from the Eurozone’s experience with Greece in 2010 suggest that while a full-blown drama is yet to unfold, the European Central Bank must stand ready to intervene if needed.

Public spending, taxes & debt

Where is UK public debt ahead of the autumn 2026 budget?

The UK’s public debt is high but it’s been higher before. What’s different this time is that it’s not on track to come back down, as a growing slice of what the state collects in taxes goes on servicing past borrowing. Every extra pound of debt interest is one that can’t be spent on public services.

Nations, regions & cities

Fiscal devolution in England: what lessons from Scotland’s experience?

The UK government aspires to boost regional growth by letting local leaders retain a share of tax revenues such as income tax and business rates. Scotland’s experience suggests that any benefits of such fiscal devolution will depend on the design of its core financial and institutional arrangements.

Lessons from history

The Wealth of Nations at 250: how did Adam Smith think about the world?

To understand the core ideas in what is widely regarded as the founding text of economics, it is useful to revisit other works by its author, as well as the philosophies that informed his thinking, not least how successive generations of scholars had made sense of an apparently disorderly universe.

Energy & climate change

Should the UK government allow more North Sea drilling for oil and gas?

In considering a return to North Sea exploration, five arguments relate to climate and clean energy: one’s bad; two provide a genuine case for limited additional production; and two strengthen the case against it. On balance, they suggest that an open-ended programme of new drilling would be unwise.

Banks & financial markets

Can higher inflation expectations ever stimulate the economy?

Managing inflation expectations is only part of today’s challenge for monetary policy-makers. In times of geopolitical tensions and repeated economic shocks, they must also ensure that their communications with households and financial markets keep uncertainty about future inflation under control.

News

Nice work

Paid work fills up to a third of the waking hours of people with jobs. Hence the growing focus on what influences the quality of that time – what makes a ‘good job’ – as well as how the world of work is changing in the face of AI, net-zero goals and shifting demographics.

Health, physical & mental

Is our economy making us sick – and what can we do about it?

Rates of chronic illness are rising in the UK, taking a toll on the NHS, the public finances and the wider economy. But illness is not produced in the health service alone. Understanding where it comes from has profound ramifications for our vision of progress.

News

An apple a day

Across the world, people are living longer, healthier lives than ever before. Yet in some rich countries, including the UK, progress has stalled or reversed. Policy responses must ensure that jobs, local economies and food systems support good health – and that healthy choices are easier to make.

All Answers