IFS Zooms In: The Economy

Helen Miller is joined by IFS colleagues Ben Zaranko and Bee Boileau to discuss the Spring Forecast. The headline numbers haven’t moved much since the autumn, but that stability may not last. With conflict in the Middle East pushing up oil and gas prices, the UK faces a potential negative shock: higher inflation, pressure on interest rates, and a tougher outlook for households, businesses and the public finances.

We discuss what higher energy prices could mean for government policy (from fuel duty to targeted support), why calls to raise defence spending are growing, and the scale of the trade-offs involved. We also look at three key forecast uncertainties: unemployment, migration, and volatile capital gains tax receipts. Finally, we ask how realistic tight future spending plans look ahead of the next Spending Review.

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Fiscal rules can sound technical, but they shape some of the biggest choices in economic policy: what we spend today, what we invest for tomorrow, and how we share costs across generations.

In this episode of IFS Zooms In, Helen is joined by Ben Zaranko to unpack why governments use fiscal rules, what the UK’s current rules are designed to do, and why - despite repeated promises - debt has continued to ratchet upwards. They discuss how a narrow, pass–fail approach has encouraged a fixation on “headroom”, contributed to last-minute policy changes driven by forecast movements, and crowded out wider debate about long-run sustainability.

They then set out an alternative approach: a clearer fiscal strategy at the start of each parliament, assessed against a broader dashboard of indicators rather than a single bright-line test, using a traffic-light style system to support a more transparent and nuanced public conversation about the state of the public finances.

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On average, students now leave university with just over £50,000 in student loan debt. Repayments are income-contingent: many graduates will repay little or nothing, while others repay 9% of their income above a threshold for decades, often watching the outstanding balance rise. That design has led some to argue the system is unfair and to argue that students were mis-sold loans whose terms have shifted over time.

In this episode, Helen is joined by Nick Hillman, Director of the Higher Education Policy Institute and a former government adviser during the introduction of Plan 2 in the early 2010s, alongside Kate Ogen, Senior Research Economist at IFS, to unpack how the student loan system works in practice. We explain how the system has evolved across cohorts, how it differs across the UK, and when it makes sense to think of student finance as a loan versus a graduate tax. We also look at who repays what across the earnings distribution, how repayment thresholds shape lifetime payments, what changed with the move to Plan 5, and what recent policy choices mean for graduates and for the public finances.

Finally, we discuss competing claims about “fairness”, between graduates and taxpayers, among graduates, and across generations, and ask the core question: who should pay for higher education?

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Inflation has fallen a long way from its peak - but many people still feel worse off, and price rises have remained stubbornly above the Bank of England’s 2% target. So what actually caused the big inflation spike, how close are we to “normal”, and what does that mean for households?

Helen is joined by David Miles (OBR and former member of the Bank of England’s Monetary Policy Committee) and Peter Levell (IFS) to break down the basics: what inflation is, why central banks target 2% rather than 0%, and what drove prices up so sharply in recent years.

We also dig into who inflation hits hardest, how much of the cost-of-living crisis is really about inflation, and why the Bank raises interest rates even though it can make life feel tougher in the short run.

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The UK minimum wage is one of the biggest economic policy changes of the past few decades. Introduced in 1999 at £3.60 an hour, it’s now over £12 and it shapes pay for a large share of the workforce. But what has it done to jobs? And if firms pay higher wages, where does the money come from - higher prices, lower profits, or higher productivity?

In this episode, Helen is joined by Eduin Latimer (IFS) and Professor Alan Manning (LSE) to unpack what we do and don’t know about the minimum wage. We look at the evidence on employment effects, the knock-on impacts on pay compression, and whether the current minimum wage is set too high. Finally, we look ahead to the government’s ambitions, including faster rises for younger workers, and the trade-offs involved.

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Find out more: https://ifs.org.uk/podcasts-explainers-and-calculators/podcasts
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