A frost from Europe to blight our tender green shoots

Article Abstract:

The UK's economy has taken a positive turn showing signs of recovery with a 4% increase in exports and a 0.5% increase of imports in the 4th qtr of 1992. However, Europe's recession could still affect this recovery. West Germany's industrial production decreased by 2.5% per month while France's manufacturing output dropped 5% from Sep 1992. This recession may harm UK's trade and business confidence which has been fueled by export optimism. Although, economic recovery in the US has restored confidence and corporate profitability in the UK. Another positive factor the possibility that European interests could become low enough to allow a 1994 recovery for the continental economies. UK prospects for recovery would be better if UK officials used lower European interest rates as basis to reduce UK rates. Unfortunately, this would further weaken the currency and increase inflation in 1994.

Europe

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From cheap and cheerful to expensive and depressing

Article Abstract:

The devaluation of the British pound should have a generally positive effect on UK industry. The most significant benefit of the devaluation is expected to be the increased value of overseas earnings derived from subsidiaries based in the US, Canada, Australia and Asia. Overseas subsidiaries now account for 50% of the earnings stream of UK companies and the devaluation, coupled with strong growth in US, Canada and Australia, should raise the value of total earnings by about 6% to 7% in 1993 and 1994. This increase in earnings should, in turn, help spur the economic recovery in the UK. The anticipated short-term benefits of the devaluation will, however, come at a a heavy price since UK industry is expected to experience higher interest rates and a stricter monetary regime in the long term as the government sets out to control devaluation-related inflationary pressures.

Foreign operations, Prices and rates, Corporations, Pound (United Kingdom), Currency devaluation, Devaluation (Currency), Corporations, British

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Hey big spender

Article Abstract:

Consumer spending in the UK since 1992 has been stronger than what the public believes. Although spending may have seemed unremarkable during this period, a closer look shows that it has actually contributed significantly to the recent recovery of the British economy and has done more to spur economic growth than net trade. Since the start of the economic turnaround, economists' consumer spending forecasts have tended to underestimate spending growth. This is because their savings ratio is wrong. To estimate the savings ratio correctly, economists must be able to tell if changes in consumer spending have been driven largely by spending out of wealth and income or by the way the consumer stabilizes changes in income.

Consumption (Economics)

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