A recession is defined as a period of negative economic growth. However, there can be different causes and types of economic contraction. Different types of recession will influence the length, depth and effects of the recession. These are some of the different types of recessions. Boom and bust recession (e.g. UK 1991/92) – Very high …
Rising petrol, food and energy prices have pushed many households in the UK and around the world into an unprecedented cost of living crisis. In the UK, in March 2022 the ONS reports that 23% of households found it difficult to pay their monthly bills. The cost of living crisis is fundamentally caused by higher …
The OBR has recently made a prediction that UK national debt could soar from the current 100% of GDP to 320% within 50 years. This bleak assessment is made with regard to factors such as demographic pressures, requiring higher spending on welfare and health care, plus recent geopolitical events and rising energy prices. In 2009, …
Readers Comment. Why doesn’t the Bank of England just print the money instead of borrowing the money? Printing more money doesn’t increase economic output – it only increases the amount of cash circulating in the economy. If more money is printed, consumers are able to demand more goods, but if firms have still the same …
Readers Question: Why was inflation higher in the 1970s? In 2022, inflation has increased in western Europe to the highest levels for many years. With inflation in UK and US approaching 10%. Yet, despite rising oil prices and other inflationary pressures, inflation is still considerably lower than in the 1970s. A big question is whether …
Readers Question: How important is the budget deficit? The budget deficit is the annual amount the government borrow. The government usually financed the budget deficit by selling bonds to the private sector To libertarian and free-market economists, budget deficits are liable to cause significant economic problems – crowding out of the private sector, higher interest …
Inflation is a continuous rise in the price level. Inflation means the value of money will fall and purchase relatively fewer goods than previously. In summary: Inflation will hurt those who keep cash savings and workers with fixed wages. Inflation will benefit those with large debts who, with rising prices, find it easier to pay …
A look at different methods to reduce budget deficits. In summary, the three main policies are: Cut government spending Increase tax Achieve faster economic growth. A budget deficit occurs when a government spending is greater than tax revenues. This leads to an accumulation of public sector debt. If the deficits are unsustainable, this can cause …