King confirms green shoots
CPI inflation has fallen to 1.6%, and RPI inflation started to recover to -1.3%, in the measure of the annual rate to August. Is this good news?
For CPI, it means that the rate is moving further away from the target of 2%, which would be a concern if it was to continue on that trend, but the RPI measure indicates a slightly lower level of deflation, which should be a welcome sign. However, in both cases, it depends upon the reason as well as the expectation of what happens next. In a speech to the Treasury Select Committee, Mervyn King suggested that inflation is likely to be volatile over the next year, and focusing on GDP, he said that there were signs of a recovery to positive growth in the third quarter of the year.
But he remains very cautious; although the European Commission forecast the UK to grow 0.2% between July and September, this is less than in France or Germany, and Mervyn King suggested three factors, or headwinds, against which UK growth would have to struggle in order to become positive.
read more...»Blade Runner
Changing your razor blade is no soft touch decision. After years of teaching my old three-blader to recognise and traverse the craggy features of my cheeks and jaw (I prefer to shave without a mirror) I took the plunge last week and swapped for one of the new Azor razors from King of Shaves. The Azor is the first British designed, engineered and manufactured razor in over a century and it was launched last June in a bid to win a share of the £315m annual sales of razors in the UK alone in a duopolistic market dominated by Gillette and Wilkinson Sword.
read more...»The Folly of Growth
The New Scientist has a special report on the environmental consequences of economic growth - The Folly of Growth - and their website carries some very useful links to recent research.
The Credit Crunch in Charts
Our new classroom poster set provides teachers with a set of data posters offering students a sense of how the credit crunch has affected the UK and other economies and also bringing them up to speed with the latest developments....
read more...»In the Long Run
An acquaintance who works on the news desk at the BBC tells me that the deck has been cleared for a full day of “recession coverage” when the GDP data for the UK is published on Friday morning. With zero growth in the second quarter (likely to be revised downwards) and negative growth in the three months covering July through to September, the broadcasters will be calling the recession and sending reporters out far and wide to test the temperature of the economy.
The first recession since 1992 is important news but a sense of the long run is also important. I will be trying to put the data in context with my students by looking at how the latest figures fit into the cycles of the last forty or fifty years. To that end I have produced an eight chart PowerPoint using EcoWin which looks at
Real GDP since 1955
Unemployment since 1972
Consumer price inflation since 1960
Policy interest rates since 1930
Employment rate since 1972
Construction industry production since 1955
Capital investment spending since 1955
Real household disposable income since 1955
The PowerPoint can be downloaded here
The_Long_Run_Perspective.ppt
Why do we need economic growth?
John Sloman discusses this in his latest piece for the BBC magazine. His feature looks at the benefits of growth and some of the darker economic and social consequences. Growth is a necessary but insufficient condition for improvements in welfare and material living standards.
Here is the link to his article
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