In the past five years, the UK has experienced an unprecedented period of stagnant economic growth. The fall in real GDP is longer than even the great depression. Given the unusually depressed nature of the economy, what policies could the UK pursue to boost economic growth and recovery? Here are eight possible policies with their …
Readers Question: What is the importance of bank lending to the UK economy? Bank lending plays an important role in influencing levels of consumer spending, investment and economic growth. When bank lending reduced at the start of the credit crunch in 2008 – this decline in bank lending was a significant factor in causing the …
The ILO recently produced their growth and wages report for 2012/13. This suggested that across the developing world, labour markets are being characterised by falling real wages and a decline in labour’s share of national income. In particular: Real wage growth has been flat – even negative in the past few years. There is an …
Readers Question: What do people mean by countries/society/financial implosion? Financial implosion implies a serious financial crisis where a country experiences a severe economic and financial crisis. The concept of implosion suggests that a crisis in one part of the economy would have a knock on effects to other parts as well – leading to a …
Recently, a report suggested austerity can increase debt levels. Now, there is an indication that austerity could cause a decline in credit ratings. This has certainly been the experience of many European countries – who since they introduced austerity measures – have seen a reduction in their credit rating. Austerity hawks have often sold immediate …
Readers Question. Can you explain why the Government and Economic Commentators are talking about a multiplier (in relation to budget cuts) of between 0.5 and 1, whereas I always thought that the GDP multiplier was bigger than this. Just to summarise a multiplier of 0.5 would mean fiscal consolidation (spending cuts) of £1bn, would lead …
One feature of the current economic malaise is that growth predictions for the UK economy have been consistently over-optimistic. For example, the Office for Budget Responsibility originally forecast economic growth of 5.7% between 2010 to mid 2012. The economy failed to meet this target, growing by just 0.9% during this period. To be fair to …
What are the key issues affecting the UK economy over the next few years? Recession and Recovery The biggest problem facing the UK economy is the lack of economic recovery. After a fall in GDP of 6% in 2008/09, the economy briefly recovered, but the recent double dip recession of 2012 has left the UK …