The Brexit vote has led to sharp fall in the value of the Pound, at one stage falling to £1 = $1.22 – a fall of over 15%. This will have a significant impact on British firms, consumers and also those outside Europe. In short: Winners from weak Pound UK exporters who will be more …
Readers Question: Can you please explain how speculators can gain a profit from a speculative attack on currencies? A speculative attack on a currency occurs when ‘investors’ believe that the value of a currency is over-valued and therefore, they sell that currency in anticipation of it falling and buy another currency (e.g. sell their holdings …
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Summary – If a country has a higher inflation rate than its competitors, then its good will be increasing in price at a faster rate and therefore, they will become relatively less competitive. It will experience less demand for its exports and therefore less demand for its currency. This will tend to cause a depreciation …
Readers Question: Does Government debt matter? Do high fiscal deficits threaten economic stability? Summary Many worry that high levels of government debt could cause economic instability. In certain occasions, countries with high debt have seen investors lose confidence, leading to higher bond yields and putting pressure on the government to slash spending, for example, several …
Deflation means a fall in prices (a negative inflation rate). Though policymakers should generally be concerned if there is an inflation rate less than the target of 2%. For example, in the Eurozone Jan 2015, the headline inflation rate is -0.2%. Even if we strip away volatile prices like oil, core inflation is 0.8%. …
A list of the major recessions in UK and US. List of Recessions in UK Comparing different recessions 1919-21 Recession GDP fell 25% during the three years following the end of the First World War. Unemployment rose to 20% UK experienced deflation of 10% in 1921, and 14% in 1922 Causes of fall in GDP …