Out of the dream into the nightmare

Article Abstract:

The entry of the British pound into the Exchange Rate Mechanism has significantly curtailed the Chancellor of the Exchequer's ability to reduce interest rates. With the decline in late 1991 of the British pound's value relative to the German deutschmark, the possibility of substantial interest rate cuts to spur consumer spending in 1992 seems unlikely. As a result, the British recovery forecast in 1992 may be too weak to stop the rise in the unemployment rate. The rising unemployment rate, coupled with growing public dissatisfaction with health and education policies, may well undermine the ruling Conservative Party's chances of winning the 1992 general elections.

Finance, taxation, & monetary policy, Political aspects, Conservative Party (United Kingdom), Unemployment, Recessions

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America: the year of living dangerously

Article Abstract:

A British view of the effect of politics on U.S. budget legislation includes a brief analysis of the Gramm-Rudman Act. The tax reductions of 1981, espoused by President Reagan, are blamed for the annual U.S. deficit of $191 billion (which is increasing with each passing year). Most of the deficit is attributable to expenditures for U.S. defense and the U.S. Social Security system, the two largest components of the budget. The automatic spending cuts mandated by the Gramm-Rudman Act will prohibit Reagan from winning his proposed budget. One of two things must happen: taxes must be raised or the Gramm-Rudman Act repealed.

United States, National debt, Public debts, External debts, Deficit financing, Deficit spending

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Sterling: a new Treasury 'ism'?

Article Abstract:

British officials are attempting to improve the economy by boosting the currency. This would lead to a reduction in import prices which would have a direct impact on inflation. Until recently, the Treasury did not see the exchange rate as an especially important element of monetary conditions, but due to a rise in inflation in the spring and an erratic money supply, intervention in foreign exchange markets was seen as desirable. The Bank of England's choices in the discount market will have bearing on the economic future.

Economic aspects, Bank of England, Interest rates, Fiscal policy, Monetary policy, Money supply, Great Britain

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