1/12/2009

What are they going to do with no-so-improving economic situation in the UK?

Yes, it's time to update my blog.

No, I haven't come back to Russia. 

So..

I have read both articles on which we should comment as a homework.

The UK, as well as many other countries in the world, felt the whole destroying power of credit crunch on it's economy. The UK Government is trying to fix the situation, and even said in November that the situation will be stabiliased in the second half of 2009. Now it's obvious that it won't happen.

The government is trying to somehow control all those things that happen because of credit crunch but not so successfully. People are still loosing jobs, every week companies are collapsing (my favourite Zavvi!!! :((((( ), banks have no idea what to do.

A variety of methods that were supposed to help have been introduced not so long ago, some of them have already been put in action (the ad valorem tax cut from 17.5% to 15%). The chancellor, Mr Darling, cannot deny that the times are 'difficult'. A number of fiscal policies has worked very well, taxes seem to help the situations, but what is happening about monetary policies?

The interest rates have been cut recently and now they are at the point of 1.5% - the lowest rate in the whole history of Bank of England (established in 1694). Many economists comment on this action negatively, telling that it will bring the UK's economy into the new level of disaster. Seriously, I cannot see the point it this critical cuts of the rate of interest! Yes, people need to be encouraged to spend more as now they seem to save all that they have. But what about confidence? What about revenue for banks? 

Or another idea - printing more money. First of all, this will have a huge affect on the pound competitiveness in the international trade. No doubt that the pound is really weak now - more currency printed means even a weakier position. In the nearest future euro will be more expensive then pound.. hey, how the UK's goverment can be talking about improving the situation?

A well-planned regulation is needed. Fiscal policy is working, but those manipulations with interest rates and money printing should be reviewed or.. who knows what will happen tomorrow.

3 comments:

chris sivewright said...

Don't forget this:

http://efbusinesseconomics.blogspot.com/search/label/Sociology

chris sivewright said...

NINE outstanding pieces of homework

chris sivewright said...

11 pieces of Sociology homework set

4 pieces of Economics

12 pieces of Business Studies

Warnings have been posted.

See http://efbusinesseconomics.blogspot.com/ for homework