In August of 2010, I argued on this forum that the Fed should expand its policy of Quantitative Easing. By now the US is well into a programme that, by the end of June 2011, will have added $600bn to the Fed’s balance sheet. There is widespread discussion of what to do next. Read more
By Eswar Prasad and Karim Foda
Despite a number of recent shocks, the global economic recovery is getting on to a firmer footing.
The latest update of the Brookings Institution-FT Tracking Indices for the Global Economic Recovery (TIGER) indicates that resurgent job growth and rising business and consumer confidence are solidifying the recoveries in many advanced economies. Emerging markets are still doing well but some of the shine is coming off these economies as they tighten policies to cope with inflationary pressures.
The Overall Growth Index for the G20 economies shows a slight uptick in recent months, led by a gradual rebound in real activity. After the initial post-recession surge, financial markets have pulled back a bit, at least in terms of growth in stock market indexes and valuations. One bright spot is the resurgent business and consumer confidence in both advanced and emerging economies. Read more
My Lords, it is a sign of the jittery state we are in that a slower-than-expected slowdown in the rate of growth is hailed as strong evidence of recovery. Of course it is nothing of the sort. It marks the end of a period in which the economy has been supported by fiscal policy, with some help from the depreciation of sterling. Read more
The recent report of the committee chaired by Lord Browne, former BP chief executive, on UK higher education funding and student finance raises concerns about policy being driven by accountancy rules, rather than by rational argument. Read more
There is a widespread perception that quantitative easing is synonymous with increasing the money supply. But it is more than that. Read more
Prime minister David Cameron on Monday warned that public sector pay, pensions and state benefits would face a squeeze as he prepared the UK for the “painful times ahead” as the government deals with the £156bn deficit. Martin Wolf, the FT’s chief economics commentator, says the government must set out its plan to eliminate the economy’s structural deficit, but there is a serious risk that if the cuts are too brutal the country could return to recession.
Since the election of May 1979, just under 31 years ago, the UK has had one change of power, in 1997, and two dominant politicians: Margaret Thatcher, prime minister from 1979 to 1990, and Tony Blair, prime minister from 1997 to 2007. The era that these charismatic politicians defined is now over. That is the biggest lesson to draw from the Budget delivered by Alistair Darling, chancellor of the exchequer.
Continue reading “‘Back to the future’ imperils Britain”. Please leave your comments in the box at the end of Martin Wolf’s column.
If all the economists in the world were laid end to end, they would not reach a conclusion. The “battle of the letters” – two letters in the FT, from Lord Skidelsky and others and Lord Layard and others, replying to a letter in the Sunday Times from Professor Tim Besley and others – brings this hoary joke to mind.
The remainder of this column can be read here. Please post comments below.
In Friday’s FT, more than 60 leading economists back the decision of Alistair Darling, UK finance minister, to delay spending cuts until 2011. In two letters, they argue that (1) a sharp shock now would be dangerous; and (2) the first priority must be to restore robust growth.
Rachel Lomax, Lord Skidelsky, Brad DeLong and Joseph Stiglitz are among those to have co-signed the letters. Read more