A budget for growth and solvency

Article Abstract:

Recovery of the UK public finances is possible through fiscal tightening and tax hikes. A tightened fiscal policy will preventhuge fiscal deficits from destabilizing public finances on a long-term basis. If there is no such tightening, public debt will balloon, dramatically increasing the cost of debt interest. This condition will only raise fiscal deficit and outstanding public debts even when economic growth is achieved. Fiscal restraint should be matched with lower interest rates. While a tax hike could generate at least two to three billion pounds sterling, a delay in raising taxes could prevent reduction of base rates. Reduced interest rates areseen to vastly improve export and general spending. A combination of higher taxes and lower interest rates has been proven in the US and the UK to result to steady growth, low inflation and lower long-term yields.

Public finance

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Secular trends, cyclical pressures

Article Abstract:

The slowdown in the growth of the US labor force since the high-inflation period of the 1970s is responsible for the disinflation scenario that the country has been experiencing for nearly two decades. The Asian economic crisis, which has resulted in the availability of inexpensive imports to the US, has also led to efforts by US companies to curb increases in labor costs. This development has served to put long-term disinflationary trends in place that helped in the continuous rapid growth of the US economy without the corresponding inflationary pressures. However, the recovery of the Asian economies, an unemployment rate of 4.2% and a current account deficit that is projected to be about 3.5% of GDP in 1999 have caused the Federal Reserve to adopt a tighter monetary policy.

Administration of General Economic Programs, Currency Stabilization Programs, Fiscal policy, Currency stabilization

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Inflation may be down, but it's not out

Article Abstract:

The drop in British inflation rates registered in 1991 does not necessarily mean that the battle against inflation has been won. Headline inflation, as measured by the monthly RPI figures, may have been halved, but core inflationary pressures remain. There is, in fact, a strong possibility that the RPI may be moving upwards in 1992 as the positive effects of lower poll tax bills and mortgage interest rate reductions run out.

Economic aspects, Inflation (Finance), Mortgages, Inflation (Economics), Great Britain, Poll tax

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