Preliminary figures for Q1 2012 show the UK has re-entered recession, with a second successive quarter of negative economic growth. The negative economic growth occurred despite a small growth in the service sector and spurt in retail sales of petrol. The biggest factor contributing to the negative economic growth came from the construction sector, which …
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, …
Inflation in the UK remains relatively high given the state of the economy. It continues to be above the Bank of England’s target of 1-3%. However, the MPC will not be overly concerned about inflation. They are more worried about the weak prospects for economic growth and will be ‘hoping’ / predicting inflation will continue …
Readers Question: Why is the current recession in Europe so bad? The recession in the Eurozone is one of the deepest recessions on record. For example, Greece are expecting 2013 to be the sixth consecutive year in recession (with on and off quarters of recovery)- this is one of the longest recession on record. Output …
Most European countries have embarked on a range of austerity measures designed to reduce their budget deficits. Why have austerity measures been pursued with great vigour in Europe? What is impact of austerity measures on economic activity? Why Austerity? Pressure from Bond Markets. Investors have become nervous about holding debt in several Euro-zone countries. This …
Readers Question: There just seems to be many paradoxical actions taking place in markets and economies at the moment. How do we explain? Paradoxes of UK economy Low interest rates have not increased spending / economic growth Despite recession, inflation has been above target. Despite recession and depreciation of Pound, current account deficit increased in …
What are the Global Imbalances? US ran a large and persistent current account deficit (imports higher than exports) of up to 6.5% of GDP in 2006 Diagram of Current Account Surplus / Deficit in US and rest of world source: (1) 2. China ran a large current account surplus, accumulated foreign reserves, kept Yuan undervalued …
Readers Question: Economics is a social science, it contains graphs, diagrams and statistics to make strong evaluations and at university level it also often seems to have a strong Maths content which allows for even stronger analysis, calculation of events and evidence of theories. So how is it possible that often economic events such as …