Readers Question. Can you explain why the Government and Economic Commentators are talking about a multiplier (in relation to budget cuts) of between 0.5 and 1, whereas I always thought that the GDP multiplier was bigger than this. Just to summarise a multiplier of 0.5 would mean fiscal consolidation (spending cuts) of £1bn, would lead …
According to the National Institute for Economic and Social Research (Niesr), fiscal consolidation in the UK is likely to increase the UK’s debt burden. Or to put it in layman’s terms there will be ‘pain, but no gain’ They model the impact of fiscal consolidation in both ‘normal’ times (scenario 1) and in the current …
Why have countries in the Eurozone faced greater difficulties in promoting economic recovery? How does a country with its own currency find greater flexibility in overcoming a recession? 1. Impact of Currency and Bond Yields A striking feature of recent years is that countries in the Eurozone have been significantly more susceptible to rising bond …
Readers Question: The task of MPC is to stabilise inflation at 2%. Current inflation is around 5% and the Bank of England has to tighten the Monetary policy to control the inflation. If the Government revises the inflation target and set it to 5%, then what would be the effect on the economy and what …
Following on from previous posts – How much has government spending been cut – | How was budget deficit cut by 25%?. It will be useful to republish some data from Mainly Macro – on a post UK austerity and some facts UK Cyclically adjusted primary deficit 2010 2011 2012 2013 IMF 2 -6.1 -3.9 …
Apart from economics my big interest is in cycling. This weekend, I’m doing the UK national hill climb championships, a short race up a steep hill in Ramsbottom (the Rake). First prize is a nice cloth cotton cap and a pat on the back. It is unlikely there will be any dope tests (though there …
The government have repeatedly pointed to their ‘achievement’ of cutting the budget deficit by 25% in the past two years. But, how has this been achieved? and has it actually helped the UK economy? UK Net Borrowing 2007-08 £40.3bn 2008-09 £104.2bn 2009-10 £167.4bn 2010-11 £145.1bn 2011-12 £119.3bn 2012-13 £127.3bn – estimated This shows a 25% …
The amount of UK retail sales increased by 2.5% in the 12 months from September 2011 to September 2012. This measure includes the amount (quantity) of goods in all retailing, seasonally adjusted. The amount spent (value of goods) increased by 3.2% Annual store price inflation was estimated to be 0.7 %. This suggests that the …