Professor Philip Lane:

We have a quarterly bulletin coming out some time soon where we will dedicate the study to that issue. It is not quite finalised yet, but in general terms this goes back to the financial market turmoil issue. The way the models work is that it is clearly negative for the UK and for us for two reasons, one is that if the UK slows down we will lose export customers and, second, on top of that all of the models say sterling is going to depreciate quite a bit, so there is double hit here from the reduced export customer base and sterling moving. There is no doubt it is a negative, but my view is that the models understate the negativity because they have not taken into account the financial speculation. We must ask whether there will be a plunge in the stock markets or increasing risk premia in the bond markets, among other things. We will be reporting what the models say, and it is negative, but I think they understate.