The economic cycle plays an important role in determining the level of government borrowing, especially in the short run. Essentially, higher economic growth leads to lower government borrowing, but a recession will increase government borrowing. Over the past few years (2008-12) – the idea that an economic downturn increases government borrowing is probably one of …
A look at the nature of the UK economic recovery. Is the recovery sustainable? Who has benefited the most from recovery? Which groups of people have not benefited from the recovery? In the past two years, the UK economy has posted relatively impressive growth figures. The UK posted annual growth of 2.6% between Q3 2014 …
Readers question: In all the media coverage of the UK deficit / debt / recovery, two aspects are rarely highlighted / quantified / contextualized. 1. The £50bn interest payments on the debt (opportunity cost / %) 2. UK productivity (output per head / sector / history) I think interest payments on debt are an important …
Readers question: should the government focus on achieving a particular macroeconomic objective over the others? This is a good question. There is a lot that can be said because it encompasses so many different topics. Firstly, the three main macro-economic objectives: Higher economic growth Low inflation Low unemployment There are also less important objectives Reducing …
Question from the Economist. – It is easy to understand the case that European austerity is self-defeating. But it is also easy to see that one cannot run large deficits year after year without limit and that some countries (Greece, Portugal) have exhausted the willingness of private investors to finance them. Is Austerity self-defeating? Austerity …
A quick look at benefit spending in the UK. This is a follow up to Social security spending. Thanks to HM Treasury for help in finding useful data set. Source: Public Expenditure Statistical Analysis 2014 | Data Chapter 5 – 5.2 Social Protection spending Firstly, there has been a modification to the category of government …
The welfare state typically includes all benefit payments (pensions, unemployment insurance, child benefits, income support e.t.c). The modern UK welfare state was founded in 1948 with the aim of providing ‘cradle to the grave protection’. The intention was that welfare payments would help people through temporary periods of difficulty, such as sickness and unemployment. There …
Readers Question: Do you believe the Coalition Government has used the right macroeconomic policies with regards to reducing the budget deficit? No. I’ve written a few times that I believe the coalition government made a big mistake in prioritising deficit reduction over economic recovery in 2010. The consequence of trying to reduce the budget deficit …