Threats to UK economy

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Since the credit crisis of 2008, the UK economy has experienced structural weakness of Low economic growth Very poor productivity growth Weak demand Unbalanced economy geared towards consumption and low levels of investment. In addition to these structural weaknesses, the UK economy in 2020 now faces real threats from A hard Brexit Risk of slowdown …

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The link between budget deficits and bond yields

Questions on budget deficits and bond yields. 1. What is the Link between the size of a countries budget deficit, and bond yields? Highest budget deficits – Ireland, Japan, UK and US 10 Year Bond Yields   Greece and Ireland seem to have the relationship you might expect – deficit close to 10% of GDP …

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Types of tax

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A tax is a charge levied by a government to raise revenue. The main types of taxes include Income tax – a percentage of income. Corporation tax – a percentage of a firm’s profit. Sales tax/VAT – an indirect tax on the sale of goods. Excise duties – taxes on alcohol, tobacco, petrol. Production taxes …

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UK Balance of Payments

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The balance of payments is the record of a country’s transactions / trade with the rest of the world. The balance of payments consists of: Current Account (trade in goods, services + investment incomes + transfers) Capital Account / Financial Account (capital and financial flows, net investment, portfolio investment) Errors and omissions. It is hard …

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What is the optimal inflation rate?

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The optimal inflation rate is often considered to be around 2%. For example: The UK target inflation of 2% +/-1 The ECB target inflation of less than 2% US Federal Reserve target inflation of less than 2% (But from 2020 are likely to make inflation target symmetrical like the UK) Why Central Banks wish to …

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Geographical unemployment

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Geographical unemployment occurs when people are without work because of immobilities in firms and workers moving to/from depressed regions. For example, London may have a booming job market with vacancies, however, an unemployed man in south Wales may be unable to take the job because of difficulties in moving to London. Alternatively, a firm may …

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Effects of a Falling Dollar

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An essay on the economic effects of a falling dollar. Between 2006 and early 2008, there was a 15% fall in the trade-weighted value of the dollar. Then from 2008 to 2011, there was another fall of around 15%. In summary, a fall in the value of the dollar will have these effects. Makes US …

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Problems in Preventing a Recession

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In a recession, fiscal policy and monetary policy can, in theory, be used to increase aggregate demand and boost economic growth. However, in practice, there can be many difficulties with preventing a recession. If the world economy was to get close to recession in 2020, could policymakers act decisively to prevent a recession?   Factors …

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