The UK government has a national debt of over 55% of GDP. It finances its debt by borrowing from the private sector. Its debt is managed by the Debt Management Office DMO 1. By issuing government bonds (gilt edged stocks) demand comes mainly from non- bank financial sector e.g. insurance co. i) e.g. Treasury 10% …
Black Wednesday refers to the date 16 September 1992, when the UK was forced out of the ERM. The Exchange rate mechanism was a key policy tool for the Conservative government. The logic of joining the ERM was that the chancellor Nigel Lawson believed that being in a fixed exchange rate Would help to reduce …
Readers Question: why does economic growth not get noticed by the man on the street? Recently, the ONS released a report saying that real wages were 62% higher than in 1986. This is the result of sustained economic growth. (Real wages take into account inflation.) In April 2011 the average full-time employee in the UK …
A helicopter money drop is a form of monetary policy in which a Central Bank prints money and distributes it directly to households/consumers. The aim of helicopter money is to boost nominal GDP, overcome deflation and help reduce unemployment. In normal circumstances, printing money will be inflationary. Economists usually suggest helicopter money in a liquidity …
As a keen cyclist, I went down to London last weekend to watch the Olympic road race. It was pretty exciting standing on the Fulham road watching the peleton go past. That part of London seemed pretty busy and nearby cafes were doing very well. However, in the centre of London, many shops and hotels …
Typically, a recession will lead to a negative output gap and lower inflation. However, after the recession is over, the economy can usually bounce back and recover this temporary loss of output. However, this ‘great recession’ is different in that there has been no bounce – only a prolonged recession – suggesting the usual expectations …
Readers Question:Do you really think the UK will keep the AAA credit rating for say the next 2 years? The UK is one of the few countries to have a AAA credit rating. (list of countries with highest credit rating) I’ve always felt that the UK should be able to maintain its AAA credit rating …
Readers Question:… So, basically we have the FED using it’s money to liquidate the fund’s of other people, and those other people are lending, or a portion of them are lending, the fund’s that they now have because of the FED. Wouldn’t it make more sense for the FED to, instead of purchasing bonds so …