Stagnation or deflation: economic acid test

Article Abstract:

Am examination of economic trends reveals that inflation seems to be posing more of a problem than the Chancellor had anticipated, and the government may have to choose between accepting moderate inflation and low growth, or maintain the current anti-inflationary controls and run the risk of a recession. The economic forecasts show that corporate profits growth is expected to drop over the next two years, and non-oil economy unit labor costs are expected to rise between 7.5% and 8.5%. By early 1990 there should be 2.5% real growth, declining profitability, and rising unemployment.

Inflation (Finance), Fiscal policy, Inflation (Economics)

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Interest rates: high enough for now?

Article Abstract:

The British debate over monetary policy has been restimulated in 1988 by the rise in value of the pound versus the deutschemark. The strength of the British currency is associated with the rebound of the US dollar following a temporary drop after the Oct 1987 stock market crash, and with ongoing high interest rate differences between the UK and West Germany. Economic growth in the UK stands at about four percent annually, well higher than the rate in West Germany. It is suggested that recent raises in UK interest rates will not be large enough to cut down domestic demand growth.

Foreign exchange, Interest rates

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