A casual observer may have been led into thinking that the recent credit crunch and recession were caused by profligate governments, with Governments spending and borrowing too much. Much attention has been focused on the need for fiscal austerity and less on ways to maintain recovery and help reduce unemployment. Governments are not entirely blameless, …
Readers Question: My question is if some many people are aware of this debt and credit problem, why are governments continuing this policy? Debt is nothing more than future taxes which has a crowding out effect. It is a statement that says, government is a more efficient player in the market than individuals. (from Rapid …
The UK credit rating is a measure of the UK government’s credit worthiness on the level of government borrowing. AAA rating implies that the government is liable to honour its debts and repay bonds and gilts in full. A- would indicate a small chance of default. BBB rating implies the investment is speculative with a …
If you are studying for exams, you will hopefully, be learning that the value of a currency is generally influenced by factors such as: Interest rates – low interest rates lead to hot money flows out of economy and a weaker exchange rate. Relative inflation rates – Higher inflation makes a countries exports uncompetitive and …
Readers Question: Does it (financial crisis) have any possible positive effects for the future? It is an opportunity to repair a broken financial system and put in safeguards to prevent future boom and busts. For example, we could have policies which banks automatically hold more deposits during a boom to provide counter cyclical instruments. Better …
Readers Question: What would be the impact of a recession in China on UK and global economy? China’s economy continues to break records with its break neck records. Depending which measure you use, China is likely to be the world’s biggest economy very soon. Yet, there is no guarantee that this impressive growth will always …
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: I trying to find appropriate policies that the Icelandic government could adopt to deal with the country`s substantial current account deficit. Do you know what policies they are using for the moment, and more importantly which policies they should adopt? Related Problems with Iceland Economy Solving UK Current account deficit At the height …