What explains the difference between UK and US economic growth rates since the start of the crisis in late 2007? Firstly, the recession was slightly deeper in the UK with a 6% fall in real GDP during 2008. Possibly, the recession was deeper in the UK because of our greater reliance on the financial sector. Since …
Since coming to power, the Conservatives have made reducing the UK’s record peace time deficit a high priority. It has been argued that drastic action was necessary to avoid the UK’s debt becoming unmanageable. David Cameron argues without rapid spending cuts, the UK could be facing rising interest rates and the prospect of debt default, …
Perfect competition is a market structure with the following features Many buyers and sellers – 1000s of firms. Freedom of entry and exit into the market Homogenous good Perfect information In a way, stock markets are an example of perfect competition. There are hundreds of buyers and sellers. When buying shares you can choose from …
Readers Question: when I read the EU spends 50% of their GDP, what does that actually mean? That half of Europe’s taxes are spent on government projects like welfare and entitlements, like taking money from the left hand pocket and putting money in the right hand pocket? I’m lost. Could you please use credit cards …
Ring fencing is a term to describe the situation where a firm makes part of its business a separate entity to the rest of its business. The purpose or ring-fencing an aspect of your business is so that losses in one area can’t affect another. Ring Fencing Banks The recent Independent Commission on Banking ICB …
Readers Question: Why, on the one hand, do commentators talk about organisations and consumers paying off debt and not having money to spend. And on the other hand, Corporations sitting on large piles of cash? In the boom years 1995-2007, UK economic growth was led by consumer spending and a rise in borrowing. The saving …
Readers Question: Is large government spending bad for economic growth? to what extent does empirical evidence support this assertion? How Government Spending Might Lead to Lower Economic Growth Higher spending leads to higher taxes. Higher income taxes may discourage people from working. High corporation tax might discourage firms from setting up in that country. (e.g. …
Readers Question: I am much in favour of governments defaulting on what they owe to private financial institutions (as opposed to other governments). This would be in line with the ideas fuelling the current OCCUPY THE WALL STREET movement. I would very much like someone to comment if this is at all possible and practical. …