economics

UK Devaluation of Sterling 1967

UK Devaluation of Sterling 1967

In 1967, the UK government of Harold Wilson devalued the Pound from $2.80 to $2.40 (a devaluation of 14%). It was a major political event because the government had tried hard to avoid a devaluation, but felt forced into the decision because of a trade deficit, a weak domestic economy and external pressures from creditors. Background to devaluation of 1967 The government pursued an exchange rate peg of £1 to $2.80. A strong Pound was seen as important for maintaining living standards and providing an incentive for manufacturers to increase productivity…

UK Economic History

UK Economic History

A look at different aspects of UK economic history, concentrating on the different decades of the Twenty and Twenty-First Century. Includes histories of particular sectors, such as housing and the coal industry. The economy of the 1920s – a legacy of war debt, deflation and life under the gold standard The economy of the 1930s – the economics of mass unemployment, but also economic recovery and growth of surburbia. Post War Economy 1940s and 1950s – Austerity, rationing, war debt, but full employment, new welfare state and…

Savings ratio UK

Definition of Household savings ratio: The percentage of disposable income that is saved. (1) Total savings = Disposable income – Household consumption UK Saving Ratio Latest UK household savings ratio: Q4 2015 = 3.8% (31 March, 2016) UK Saving ratio. Source: National income accounts Q4 NRJS dataset (more…)

Impact of a banking crisis

Impact of a banking crisis

Readers Question: Can anyone explain the reasons why the Banking Crisis may have brought about increased unemployment? A banking crisis implies major banks run short of money (liquidity). In a severe banking crisis (e.g. Great Depression 1929-32), some banks may go out of business. If banks do face liquidity shortages or worse, it will have a major impact on savers, business and consumers.  Major banking crisis invariably effect economic growth and can cause unemployment. In the recent banking crisis, banks cut back on lending. This meant firms didn’t have the…

Investment in UK – Business and Public Sector

Investment in UK – Business and Public Sector

  Total UK Business investment since 1980, slow recovery from 2009. (seasonally adjusted.) Business investment in past ten years Source: ONS NPEN From 2007 to 2010 we see a 22% fall in private sector business investment. This was the result of Banking crisis – banks didn’t want to lend Fall in consumer confidence Recession, which caused firms to hold bank from investment Recovery in business investment since 2010 From a low basis and 20% fall Helped…

Does a devaluation help the economy?

Does a devaluation help the economy?

A devaluation occurs when the exchange rate falls in value. This causes exports to be cheaper and imports to be more expensive. In theory, it can help increase economic growth, though it may cause inflation. The impact of a devaluation depends on economic circumstances. If a country is suffering from being uncompetitive with high unemployment and low inflation – a devaluation may help considerably. However, in a severely depressed global economy (e.g. 2008-13, a devaluation may be insufficient to restore economic growth.) Also, the current fall in the value of the Pound…

Policies to reduce a budget deficit

Policies to reduce a budget deficit

A look at different methods to reduce budget deficits. A budget deficit occurs when a government spending is greater than tax revenues. This leads to an accumulation of public sector debt. If the deficits are unsustainable, this can cause rising bond yields (higher interest payments) and in the worse case, lead to a loss of confidence in the government. Though this is quite rare for countries with their own currency (not in Euro) The obvious way to reduce a budget…

Are Premier League football ticket prices too high?

Are Premier League football ticket prices too high?

Recently, Liverpool supporters protested about plans to increase the price of many ticket (the most expensive seat in the Main Stand will now be £77). Many supporters complain that football tickets have risen well above the rate of inflation in recent years, making football less accessible to supporters on lower-incomes. But, what are the economic arguments for limiting ticket prices? The average price of the cheapest match-day ticket from the Premier League to League Two is now £21.49. Ticket prices have increased 13% since 2011, compared to a 6.8% rise…