Readers question: Why is public debt stated as a proportion of GDP and not as a proportion of the government tax take? Generally, government debt is shown as a % of real GDP because this is best reflection of a countries ability to repay. For example, in France, the government spends 52% of GDP (National …
Recently, there has been much focus on US public sector debt – the total amount the government borrows. These graphs show the combined debt levels of both the public and private sector. Private sector debt is split up into households, non-financial companies and financial corporations. In the run up to the 2007 financial crash, we …
Readers Question: how can Germany show a surplus? I mean I can understand that German exports have always been their main source of income , but with all the world exports shifting to China and India wouldn’t we expect the German exports to decline? Thanks! German Current Account Surplus Germany has a current account surplus. …
For the past few years, it has felt a bit repetitive always asking the same question – why can’t the EU policy makers see unemployment, social exclusion and rising poverty as the real challenge facing Europe? In the current climate it is not bond yields, inflation targets or levels of debt that are the real …
Summary of UK Economy at the Start of 2013 The UK economy starts 2013 after one of the longest periods of economic stagnation on record. GDP has been flat for the past two years, and real GDP is still way below the 2008 peak. Despite the depressing picture of economic growth, unemployment (7.9%) is much …
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 …
This graph illustrates some of the different causes of the US budget deficit. Source: CBO estimates 2012 | via Krugman This shows how the deficit has been affected by certain issues. Cyclical factors Cyclical spending and lost tax revenues due to recession. Expansionary fiscal policy (economic recovery measures) Financial intervention to bailout banks and financial …