Future UK austerity

By the end of 2013, the UK government will have implemented 52% of planned fiscal consolidation. The IFS report that most of this fiscal consolidation has come through taxes. In coming years, we will see the impact of cuts to the benefit budget. Only 58% of the total cuts to benefit spending have been implemented, …

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When will interest rates rise – 2013?

When interest rates were cut to 0.5% in March 2009, few would have expected them to remain at 0.5 until the present time. Yet, we have seen an unprecedented period of zero interest rates. There is much speculation about: When interest rates will rise? How much will interest rates to increase to? What will be …

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Latvia to join the Euro

After enduring a deep economic crisis, Latvia are poised to be ‘rewarded’ with membership of the Euro in 2014. The Latvian miracle story It seems a strange that countries are so keen to join the Euro, when membership of the Euro has been a major factor in creating a real depression amongst many Euro countries. …

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Would it help to have a higher inflation rate?

Economists generally agree that a high inflation rate has various economic costs and therefore, we should use economic policy to keep inflation low. Since the mid 1980s, governments have increasingly set strict inflation targets, e.g. ECB inflation of less than 2%. The Bank of England targeting inflation of 2% +/-1. However, some economists argue that …

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What economic lessons can we learn from Latvia and Estonia?

The Latvian and Estonian economies have recently experienced – an economic boom, a spectacular bust, and recovery. Their experience is a chance to evaluate the merits of fixed exchange rates, austerity and the issues of an economy based on trade and capital inflows. Aspects of the Baltic economies Boom period between 2000 and 2007 Great …

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How sustainable is European austerity?

Readers Question: How sustainable do you think that the austerity measured imposed on European countries are in economic and political terms? This is a good question. Firstly, I feel there is a certain political appeal of austerity. See: Why is austerity politically popular? When austerity was introduced, there was a reluctant support for austerity – …

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Do we really have austerity?

Frequently we hear the argument that there is no austerity in the UK. Government spending has even continued to rise during the recession. Some would even go so far as to say that the modest rise in government spending is proof that expansionary fiscal policy is a failure, and we should actually be cutting government …

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