Readers Question: Why are there government spending cuts at a time of rising government spending? One of the confusing elements of ‘austerity’ and government spending cuts is that from one perspective, we can have a rise in total government spending – but some areas of government spending see cuts. Source: ONS Public Sector Finances MF6U …
Economists attempt to make forecasts for leading economic variables such as Inflation Economic growth House prices Exchange rates Population growth The main importance of economic forecasts is to help policymakers make better decisions. For example, if the economy was forecast to enter into a recession, the government could consider implementing expansionary fiscal policy (higher spending …
Readers Question: If there is a significant slowdown in the rate of Chinese economic growth – how will it affect the UK and other global economies? Summary The Chinese economy has been growing very rapidly, and is now one of the biggest economies in the world. The size of the Chinese economy means it has …
Readers Question: what are the possible consequences/effects of protectionism with regard to the UK and the rest of the world? Protectionism occurs when countries place restrictions on imports into the economy. This can involve higher tariffs (a type of tax on imports) or quotas and embargoes. Other forms of protectionism can be less obvious, such …
Interesting article by Ken Clarke – lamenting difficulty of raising taxes. Basically, the general public want public spending in key areas, but don’t want to have any increase in taxes to pay for them. Pensioners triple lock very expensive – but will be very difficult to challenge. When people are used to receiving money, it …
The government is committed to reducing government spending as a % of GDP to 35% – one of the lowest percentages since the 1930s. However, despite very strict government spending limits, (which see some departments spending cut by 30%), the government are still committed to a triple lock guarantee for pensioners. The triple lock guarantee …
Readers Question: How did the financial crisis affect stock markets and bond markets? Stock markets were first hit by the instability in credit markets. When financial markets realised the credit crunch would impact on the wider economy, shares in companies fell further. This is a typical response. When economies enter into a recession, firms make …
Supermarkets have strict criteria for the cosmetic appearance of fresh fruit and vegetables. The result of these criteria is that a high percentage (10-40%) of a farmers harvest can be rejected because the vegetables do not meet these standard rules of conformity. This problem of rejected vegetables was highlighted on a recent BBC programme ‘War …