Chamber and committees

I accept that point.

Professor, I want to ask you about something that is obviously close to your heart—the universities sector, and its role in developing innovation and digital technologies and helping to upskill people. What else does the universities sector have to do to improve the future skills of the graduates coming out of the sector?

Thank you.

I want to pursue this question, which the convener is right to ask, about behavioural changes. There is almost a Laffer curve of the likely trends. I go back to the additional dwelling supplement and the £34 million. I understand how you have used your arithmetic to calculate that. There was a lot of comment at the weekend about shortages in the rental markets, because the increase from 4 per cent to 6 per cent might mean that some people do not go into the market at all: that behaviour would take some people out of the market. Would that have an impact on the £34 million that is expected?

I understand that it is the rate of increase that matters. It is just that international events are incredibly uncertain at the moment and there is always the possibility of exogenous shocks and so on. I hope that we will not have that.

I will come back to productivity, which is critical to the future success of the economy. It strikes me, and I think I would be backed up by a lot of economist groups, that Scotland is in desperate need of more higher-paid jobs, particularly jobs that could see people transition from currently fairly highly paid jobs in the energy sector, for example, to other highly paid jobs. In your analysis, do you predict that we are on the right path to getting more higher-paid jobs, thereby addressing the productivity issue?

Good morning. Professor Miles, I will take you back to the issue of inflation. When you discussed that with the convener, you rightly identified the problem with Ukraine. What you said is very much in line with other evidence that we have taken, which suggested that the larger part of the inflationary situation just now is due to cost factors.

I am interested in a remark that you made in your November forecast, in which you said that although,

“In the UK, CPI inflation is set to peak at a 40-year high of 11 per cent in the current quarter”,

it is expected to fall back “sharply” during the course of next year. Given that the cost-push factors are likely to still be quite strong, where does the “sharply” come from?

On the demand side of the economy, given that nominal wages are obviously increasing, when do you expect there to be an uptick in demand in the economy that might have some impact on inflationary pressure?

Thank you very much for that answer. I have one more question. Obviously, there are predictions that America is likely to have a recession in 2023—not a real crisis, but nonetheless quite a downturn. Do you have any thoughts as to how that might impact on the world economy, and on the British economy, in particular?

Thank you.

I want to ask a technical question on the back of commentary by some economists that, following the end of lockdown and the severe restrictions that we all faced when we were unable to do some things, service industries are beginning to be rebooted. Can you put your finger on any evidence that that is happening a bit more successfully than in other areas of the economy, because we are now out and about and taking advantage of services that we could not use previously? Have you any data to suggest that that commentary is accurate, or is it too early to tell?

I heard that interview, too, and I thought it was interesting. It also flagged up that there are regional differences in the ways that people are reacting to their local high streets, which is another potential worry.

Obviously, different factors affect inflation—there can be demand-pull or cost-push scenarios. Is it your understanding that the greater component of high inflation has been more on the cost-push side than the demand-pull side—whether that has been because of a lack of supplies from Ukraine or the huge hike in energy prices?