ERM - the great escape or a cold new world?

Article Abstract:

The UK government is faced with two options on how manage the economy after its involuntary exit from the European exchange rate mechanism (ERM). The first alternative is to reduce the interest rate to 6% to end the problem of economic recession despite the corresponding decline of the sterling. Advocates downplay the risks of inflation citing the below-capacity operations of businesses and the amenability of workers to a lower wage. Critics, on the other hand, argue that the current account deficit of about 2% of the gross domestic product does not reflect the supposed subcapacity operations. Also, supporters' prediction of workforce attitude is not backed up by historical evidence. The second and better alternative is to wait for the domestic economy to improve and the German interest rates to decline before entering the ERM again. The latter choice is preferrable because it avoids threats of further inflation.

Management, Pound (United Kingdom), Economic stabilization

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None of those post-recession blues

Article Abstract:

There is a general consensus among economists that the end of the recession will witness the resurgence of the UK as a dominant European economic power. Former 'Economist' editor Brian Reading feels that the current economic climate gives the UK a unique opportunity to strategically position itself in the global economic market as the US is busy determining its political future, Japan deals with the problem of effecting reforms and Germany addresses the problem of unification. CBI's John Banham and Goldman Sach's Gavyn Davies share Reading's optimism about the British economy's recovery from the current recession. Banham sees the current state of the British industry as a marked improvement in comparison to previous years. The 'Sunday Times' conference held on Jun 1,1992 in London was the venue of the economists' discussion.

Conferences, meetings and seminars, Economic development, Economic forecasting

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The long and short of interest rates movement

Article Abstract:

Speculation abounds in the world market as to the levels of real long-term interest rates in the 1990s. Reducing current levels would be favorable for investors due to bonds with attractive capital gains. The expected demand for capital infusion for financing Eastern European development is seen as a positive prospect internationally. But the possibility of increased government deficits outweighing the control companies and individuals are exerting presents itself as a negative possibility. The US and British Labor Party recommend a reduction in short-term interest rates at a forced pace, but this is highly unlikely to lower long-term interest rates. The regulation of the size of government deficit would be a better option for lowering long-term interest rates.

International aspects, Inflation (Finance), Interest rates, Capital investments, Expenditures, Public, Public expenditures, Inflation (Economics)

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