Readers Questions: hi would you please describe the current state of the UK Economy. The UK economy is undergoing a serious recession. These are the main macro economic indicators 1. Economic Growth. source: ONS In the last quarter (Q3 2008), GDP fell 0.5%. GDP is also forecast to fall this quarter. The UK economy is …
The price of a small (illogically called the ‘Tall’) Starbucks Cappuccino is now £2.05. The Venti now costs £2.65 (2008 prices) This year the price of Starbucks drinks have increased by more than the rate of inflation. Costa Coffe and Cafe Nero have both kept their prices below £2, but, industry analysts argue that it …
Readers Question: supposing a government printed more money but only used it to finance the cost of imported goods, what then would be the effect on the domestic economy? supposing the price of these imported goods was the same as before the extra money was printed, there is just a larger quantity of them now. …
Why is monetary policy easier to conduct than fiscal policy in a highly divided national political environment? Monetary policy is usually implemented by independent monetary authorities. For example, in UK, monetary policy is implemented by the Monetary Policy Committee of the Bank of England. Therefore, they can take politically unpopular decisions such as increasing interest …
Readers Question: Could deflation lead to devaluation of the UK Pound? Deflation in the UK means prices fall. This hasn’t happened since the 1930s, but, if it did happen, it could lead to a further depreciation in Pound Sterling. Firstly, deflation would mean interest rates would likely fall to 0%. This fall in interest rates …
Readers Question: WHAT ARE THE PREDICTION FOR THE DOLLAR $ AGAINST THE EURO FOR 2009? 2009, will probably see both EU and US economies enter into recession. So far, the EU has been slow to cut interest rates; it has given greater prominence to the spike in inflation rather than the slowing economy. However, the …
After several years of rapid growth, 2009, will prove a testing year for India. Inflation Inflation continues to pose a threat. Inflation peaked at 12% in early August ’08. Inflation, is being caused by rapid growth (demand pull factors) but, also the cost push inflation factors (rising oil prices). Hopefully, the fall in oil prices …
Readers Question: Do you have any predictions for the AUS$ against the GBP in 2009? Thanks Both, the Australian and UK economy faces a year of uncertainty and sluggish growth. It is really a question of which will be weakest. However, I think the Australian economy and currency will be hit harder than many in …