Industry is hurting, but it's only one side of the story

Article Abstract:

The UK government's finances are heading towards balance at a reasonable rate, and loan and mortgage costs are quite close to where they should be. There is no pressure for a very large increase or decrease in interest rates. However, there are still difficulties with the mixed performance of various elements of the economy. Manufacturing's share of the economy continues to decline, with particular problems for the clothing and textile industry and electrical equipment manufacturers. Weaker manufacturing will eventually affect the service industries, and will probably have an impact on retailing and transport too.

Public Finance Activities, National Government Finance, Productivity, Manufacturing, Public finance

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Why Clarke must resist the siren voices calling for a lower pound

Article Abstract:

UK chancellor Kenneth Clarke continues to insist that the pound must be allowed to fluctuate in line with financial market developments. This view is not shared by City analysts, who have some support from business in claiming that the pound is overvalued. They see the rise in the pound as bring benefits for inflation and problems for exports and growth. Some observers believe that the government should be seeking a competitive devaluation of the pound. However, the government should take care not to achieve this through relaxing interest rates, as this would create other difficulties.

Analysis, Monetary policy

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Time to still siren song on sterling

Article Abstract:

The UK manufacturing industry is misguided when it claims that the value of the pound would drop, thus boosting exports and investment, if the Bank of England were to stop raising interest rates. In fact, the Bank of England cannot easily determine the value of the pound by making changes to interest rates, and the fact that manufacturing is in a weak position does not necessarily mean that the economy is not overheating. There is no action which can be taken to counteract the fact that the UK economy is further ahead in its cycle than the rest of Europe.

Administration of Urban Planning and Community and Rural Development, Economic Development NEC, Economic development

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