Readers Question: Europe is in grip of real deflation and low growth period but then why Euro is on a rise

In recent months, European inflation has fallen to 0.5%. In several countries within the Eurozone, countries are now experiencing actual deflation. In the past year, the Euro has appreciated against a basket of currencies, such as the Dollar, the Pound and also other Emerging market currencies.

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Readers Question: How reliant is the UK economy on oil?

There are two ways of considering this question – the consumption and production of oil.

• Firstly, how much does the UK need to consume oil to maintain economic activity? Could we survive in a post-oil economy?
• Secondly, how important is the UK oil industry and the production of oil?

Consumption of oil

This shows that we are consuming a steady 1.5 to 1.7 million barrels of oil a day. Oil is an essential raw material for many key economic activities, such as:

1. Transport – cars, lorries e.t.c. mostly rely on petrol / diesel. (In the US transport accounts for 66% of all oil used. I imagine it is a similar statistic in the UK.)
2. Production of plastic
3. Fertilizers
4. Asphalt
5. Polyurethanes
6. Solvents
7. Electrical generation

Reducing dependency on oil consumption

1. There have been some attempts to reduce the dependency on oil. In transport, the government have encouraged the consumption of electric cars, with subsidies and encouraging electric car charging points.  But, between between 2010 and June 2013 only 5,034 electric cars have been registered. It is a small drop compared to the total number of cars sold.
2. According to Calor, there are 160,000 LPG registered cars in the UK, and the number is on the rise.
3. Energy efficiency. Cars have become more energy efficient with a high miles per gallon becoming a strong selling point. This has limited the growth in demand for petrol.
4. Alternative forms of transport. Some see alternative forms of transport as a way to avoid reliance on oil based fuels. However, despite growth in cycling rates and increased use of trains, cars  / lorries still dominate the UK’s mode of transport.

However, the improvements in energy efficiency and attempts to introduce alternative fuel cars are only limiting the growth in demand for oil based fuel.

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Irish national debt – the total amount of Irish government debt.

Irish national debt has increased to 117% of GDP in recent years because of a large financial bailout to Irish banks, deep recession which saw a 20% drop in nominal tax revenues, and continued weakness in GDP growth which has made it difficult to reduce debt to GDP, despite government spending cuts.

Source: cso.ie

The Total Irish Government debt 2012 Q3 – €190,954 million – (117% of GDP)

Irish government debt millions

See also: stats at ECB (Debt based on – Maastricht assets/liabilities – General government (ESA95) – European Commission – All sectors without general government (consolidation) (ESA95)

 Irish government spending

The peaks in spending in 2010 were related to the Irish government bailout of banks. After the bailout, the government has pursued spending cuts.

Example of spending cuts from 2012 budget at Telegraph

Ireland 2012 budget

– €2.2bn of the €3.8bn of fiscal consolidation is on the spending side.

– Capital expenditure will be cut by €755m, while current spending cuts to contribute €1.4bn. (includes public sector pay, welfare payments, education and health care)

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