An ill-timed economic miracle

Article Abstract:

The British economy is performing well in terms of inflation and uemployment. Business investment is increasing, which should boost productivity, and there is also potential for catching up with the US, which has seen accelerating producitivity growth. Political interference is also less likely than before. Britain still suffers from low productivity growth, and interest rates may have to rise due to strong consumer demand, while low unemployment could lead to inflationary pressures. A strong economy may not affect asset prices in a global market.

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Sterling puzzle

Article Abstract:

The strength of pound sterling does not appear to have affected United Kingdom inflation. Inflation is estimated at some 2.7%, excluding mortgages, despite a 23% rise in the value of pound sterling in the 18 months to Dec 1997. Import prices have not dropped by as much as expected and UK retailers, wholesalers and importers have benefited from higher profit margins. Exporters have seen margins squeezed, which is likely to lead to a drop in output, employment and inflation.

Prices, Inflation (Finance), Inflation (Economics)

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Not so fast

Article Abstract:

UK economic growth could level off at some 3% in 1997. Growth may not rise as rapidly as forecast, according to Salomon Brothers, and growth in consumer spending appears to be flatter. Export growth will be affected by a rise in the value of pound sterling, and inventory stocks could also be high enough to slow growth. Growth may still be more rapid than the long-term average and this could mean a rise in interest rates shortly after the 1997 election.

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