In times of uncertainty, people seek to find a safe investment. But, what are safe investments? Gold is currently over $1,500 May 2011 Gold / Silver. These are typically seen as a good investment and safeguard against inflation. Inflation decreases the value of money, but gold retains its value. With experiments in quantitative easing, there …
I wrote an article in this months (April) edition of Economic Review on the theme of spending cuts. It offers detailed arguments for spending cuts and also the problems of cutting spending in the current economic climate. It was written back in September quite a few months ago. A brief summary of the article. Arguments …
The UK economy faces a few paradoxes. Low Growth – High Inflation. Firstly, after a deep recession the economic recovery is weak. In theory, high unemployment and low growth should lead to low inflation. However, due to rising energy and food prices, we have inflation above target. This presents a conundrum for the Bank of …
The coalition expects 490,000 public sector jobs to be lost by 2014-15 as a direct result of its drastic spending cuts, Danny Alexander, the chief secretary to the Treasury, has accidently disclosed. (link to Guardian) In addition the spending cuts, wage freezes and job losses will have a knock on effect to the rest of …
How do problems in the Eurozone economy and a weak Euro affect the UK? A weaker Euro would help European goods and European travel appear more attractive. It would be good news for British holiday makers not wanting to risk transatlantic flight with the Icelandic volcano still smoldering. It would not be good news for …
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 …
Readers Question: Indicate the problems which are created for the government’s finances as a result of having to help avoid an even deeper recession. In a recession, automatic fiscal stabilisers automatically cause a rise in borrowing. The UK recession hit tax revenues hard. Income tax receipts fell as top earners were made unemployed. Corporation tax …
Most western economies are facing the prospect of record peace time government debt levels. The EU Maastrict Criteria stated that the maximum budget deficit member countries could run is a budget deficit of 3% of GDP. (By the way, I am glad this target for government borrowing has not been enforced. That would have been …