Letters to the Editor February 27, 2013 Negative interest [Re: Negative interest rates are the last thing the economy needs, yesterday] Driving down the nominal interest rate below zero (and the suggestion that Britain will see further quantitative easing) shows just how strongly the Bank of England supports the UK’s debt economy. The whole system encourages consumers to borrow money and penalises anyone [...]
Nightmare for Brussels as Italians vote to reject austerity consensus February 26, 2013 AS FAR as nightmare results go, if you sit in Brussels, Berlin or Frankfurt, the Italian elections could not have delivered a worse outcome. A fresh dose of uncertainty has been injected into the Eurozone. Although Pier Luigi Bersani, the centre-left coalition leader, won by a slim margin in the lower house, none of the [...]
Why even Keynes would be concerned about the risks of further stimulus February 26, 2013 AGAINST THE GRAIN THE loss of the AAA credit rating on UK government bonds has intensified the demands for a Plan B. So-called Keynesians are demanding an increase in both public spending and the public sector deficit. But what might the late great economist John Maynard Keynes himself have said about the current situation? Lacking [...]
The West has failed to adapt to China’s huge savings glut February 26, 2013 AS RECENTLY as 1990, the Chinese saved $153bn (£101bn) a year and accounted for less than 1 per cent of global savings. This year, they will save $4.5 trillion and account for 25 per cent. Over the last eight years, China has leapt from holding a tenth of the world’s savings to a quarter. My [...]
Letters to the Editor February 26, 2013 Italy votes [Re: Study Italy’s election: It is the shape of things to come in the UK, yesterday] A very good column. Economic failure will always be accompanied by political upheaval. I don’t think Italy’s result is worrying, however. Democracy is never worrying, except to those to whom it poses a threat. And at least the [...]
Simpler energy tariffs will worsen fuel poverty and harm innovation February 25, 2013 DAVID CAMERON has backed proposals by the regulator Ofgem to simplify energy tariffs. Under the new scheme, suppliers will be restricted to offering no more than four tariffs for each type of fuel, and customers will be put on their supplier’s lowest variable rate unless they choose otherwise. But will these proposals help customers with [...]
Misguided calls for further stimulus misunderstand Britain’s downgrade February 25, 2013 FRONTLINE ECONOMICS BRITAIN’S downgrade became inevitable on 29 November 2011. Before then, the chancellor was committed to eliminating the structural deficit within five years, and to getting net debt as a proportion of GDP falling by 2015. But new forecasts, presented on that day’s Autumn Statement, indicated that he wouldn’t achieve the first target on [...]
Why the coalition may hope for Ukip victory in Eastleigh February 25, 2013 THE Eastleigh by-election is looking like a turning point for the coalition. Opinion polls suggest the Lib Dems were just about ahead of the Conservatives going into the weekend, with Ukip surging rapidly into third. But that was before most Conservative voters had the chance to reflect upon the loss of Britain’s AAA rating – [...]
Letters to the Editor February 25, 2013 Rating Loss [Re: Loss of UK’s AAA rating will intensify the pressure on sterling, yesterday] The loss of the AAA rating may be symbolic, and markets may not consider it a disaster, but it symbolises the decline of Britain as a confident economic power. Medium-term growth forecasts are depressed, and nothing is being done to reverse [...]
Three reasons why Britain’s credit downgrade is no mere technicality February 24, 2013 A MAJOR irritation for anyone attempting to engage in an informed public discussion of economic policy is the media’s desire to latch onto any piece of news which makes a snappy headline. No one pretends that the majority of the public knows – or much cares – about how the ratings agencies work, but the [...]