Lovely organic vegetables, but will anybody be buying them in a period of falling real incomes? It seems we like our organic food, but only when incomes are rising. During the period of strong economic growth in the mid naughties, sales of organic food grew by up to 30% a year. However, last year demand …
photo Neil Cummings flickr Spending cuts will be an emotive issue, especially for people facing job losses. But, is the TUC correct to say there is an alternative to the government’s spending cuts? (TUC Link) UK annual borrowing (PSNB) is forecast to be £149 2010/11 (12% of GDP). This is one of highest peace time …
Though the UK economy may appear very weak to British consumers who are facing tax rises and spending cuts, there are various reasons which explain why sterling has recently been stronger and could continue its upward movement. Prospect of Higher Interest rates. With one of the highest inflation rates in Europe, and higher than US, …
In 1980, Mrs Thatcher made a memorable speech. “To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: You turn if you want to. The lady’s not for turning!”(BBC Link) Background – The economy was struggling under the deflationary fiscal and monetary policy. Mrs Thatcher …
Readers Question: From the current economic crises government has been slashing its base interest rates to now 2%. However, how would deflation which is currently being experienced in several countries mainly due to decreasing fuel prices affect the attempted recovery from this crisis? Deflation makes monetary policy much less effective. In fact, deflation can cause …
Two alternative views on UK’s debt problem. Debt Hawk Source: ONS The UK has seen a rapid deterioration in its budget deficit. At £146bn (12.5% of GDP) this is the biggest peace time budget deficit on record. (Apart from Greece) this leaves the UK with the largest annual budget deficit in the OECD. Given the …
Readers Question: Where is the US economy headed? Is it inflation or depression? Recently, Goldman Sachs predicted a rough year ahead for the US Dollar. They forecast the dollar may fall against Pound Sterling to $1.85 in 12 months. Against the Euro, they forsee it to fall to $1.55 in a year’s time. Exchange rates …
Definition of Fiscal Space – The difference between the current level of public debt and the level of debt that is sustainable and manageable. A key issue for many advanced economies is being aware of the level of government borrowing that is sustainable in the long term. Basically, how much can a government borrowing without …