In 2016, some argued the UK had the best of both worlds – membership of the EU, but opt outs from the Euro and Schengen Agreement, plus a generous rebate. However, since leaving the EU, the UK economy has experienced numerous problems, lower growth, lower investment and devaluation of the Pound, with some arguing GDP …
A look at the economic impact of falling house prices. Readers Question: Explain why a decrease in the price of houses can lead the economy to experience a recession. In summary: falling house prices reduce consumers’ main form of wealth. This tends to cause lower spending and lower economic growth due to a negative wealth …
Black Wednesday refers to the date 16 September 1992, when the UK was forced out of the ERM. The Exchange rate mechanism was a key policy tool for the Conservative government. The logic of joining the ERM was that the chancellor Nigel Lawson believed that being in a fixed exchange rate Would help to reduce …
Since the great financial crash of 2007, the UK economy has struggled. Although the past 15 years have been challenging from a global perspective, compared to many international competitors, the UK has slipped behind. Economic growth before global financial crisis of 2007-09 was 2.7%, the new normal is now closer to just 1.5% and with …
The recent surge in UK government gilts is a warning that unfunded tax cuts in a time of high inflation can cause markets to sell off UK bonds and make it harder to finance future government borrowing. After 15 years of ultra-low interest rates and little concern about rising debt, it is a reminder that …
In recent weeks, the Pound Sterling has fallen – losing value against the dollar and other currencies. This year, the Pound has fallen over 16% against the dollar and 7% on a trade-weighted index. In Summary A falling Pound makes: UK imports become more expensive and UK exports more competitive. A falling Pound tends to …
As the chancellor Kwasi Kwarteng was announcing his radical budget of energy bailout, and tax cuts for corporations and high-income earners, the markets took a dim view. Sterling fell and bond yields on government debt rose as investors sold UK bonds in response to the deteriorating outlook. Uniquely for such a large change of …
Why has the Pound Sterling been falling? The Pound has been in long term decline since after the Second World War, when £1 = $4.05. In recent decades the pound has continued to decline. In particular since the great financial crash of 2007, which hit the UK hard. In recent years, the combination of Brexit, …