Whilst the UK is slowly struggling out of recession – spare a thought for Greece, who are experiencing a real economic crisis – partly of their own making – and exacerbated by the straitjacket that EURO membership entails. The Greek economy has several significant problems Current account deficit of 14% of GDP – their exports …
I was looking at the scale of previous recessions. The current recession, which technically ended last quarter with a 0.1% rise in GDP, is the second worst on record. I was surprised to find that in the Great Depression, UK GDP only fell 10%. However, it is somewhat misleading. The UK economy struggled in the …
In 2009, Alistair Darling introduced a 50% tax rate on bank bonuses of more than £25,000. The bonuses would be paid by the banks rather than employees. I spent a lot of last year, saying how much tax revenues had fallen. The credit crunch and recession caused many traditional sources of revenue to dry up. …
2010 will be a difficult year for the UK economy. After the deepest recession since the 1930s, the outlook is for a sluggish recovery. Though recovery is welcome, it still leaves the problem of spare capacity, high unemployment and record levels of peacetime government borrowing. It will be a difficult tightrope between boosting economic growth …
This graph illustrates the difference between actual GDP and potential GDP. It also indicates how much Real GDP growth has lagged behind potential growth. This means the US economy currently has substantial spare capacity. This is reflected by a rise in unemployment and factories operating below full capacity. The Real potential GDP illustrates the long …
This graph shows how much interest rates have fallen in the UK. The Bank of England base rate is the main ‘official interest rate’ The 3 month libor rate is the rate at which banks lend to each other. It is important for determining interest rates set by the commercial banks. Interest Rates are likely …
The pound reached the symbolic value of $2 = £1 yesterday. This is the highest level since New Year’s Eve and is partly in response to the Bank of England’s caution in cutting interest rates. (Yesterday, the Bank left rates unchanged at 5.25%) Despite the slowdown in the housing sector the Bank still appear worried …
What happens if I take a £10 to the Bank of England? If you look at a British £10 note, it says “I promise to pay the bearer on demand the sum of ten pounds” Therefore, if the Bank of England is true to its word, you should be able to go to Threadneedle street …