Readers Question: Why do the Government often fail to achieve its main objectives of high economic growth, price stability, and a surplus on the balance of payments. Other objectives worth adding are low unemployment, low government borrowing and maybe stable exchange rate. Looking at the current climate of the UK economy, the government is only …
The US Dollar is often viewed as a safe haven currency. It is still the world’s reserve currency and the thinking is that if the dollar goes bust the rest of the world will be in an even worse situation. Therefore, during the worst of the economic turmoil, the dollar remained relatively strong because investors …
The Chancellor used the Budget speech to cut his growth forecasts. The economy is now expected to contract by 3.5pc this year, but grow 1.25pc in 2010. This would mean growth starting towards the end of this year. The IMF are more pessimistic forecasting negative growth in 2010 of -0.4% (see – slow economic recovery) …
Readers Question: Is there any other political influence on the falling rate of sterling, something like monetary policy or political uncertainty? And why did some news reports say inflation and weak sterling could be helpful to UK economy? Thanks. The value of a currency is primarily influenced by economic factors. E.g. weak sterling can be …
The US dollar surprised many people by retaining its value for a long period during this economic crisis. Despite, 0% interest rates, increasing government debt, and a current account deficit, many were still buying the dollar as it was perceived as ‘relatively safe’ However, the recent plan by US treasury to buy even more assets …
M4 is known as the ‘broad money supply’. It is a measure of notes and coins in circulation (M0) + bank accounts. This includes private-sector retail bank and building society deposits + Private-sector wholesale bank and building society deposits and Certificate of Deposit. The Bank of England produce figures on M4 growth. [link] Money supply …
There is an oft repeated quote: “A recession is when you’re neighbour loses his job. A depression is when you lose your job. “ It is one thing to write about recessions, but, when you see job lay offs near where you live and when you hear about friends who are without work, it makes …
This graph shows how much interest rates have fallen in the UK. The Bank of England base rate is the main ‘official interest rate’ The 3 month libor rate is the rate at which banks lend to each other. It is important for determining interest rates set by the commercial banks. Interest Rates are likely …