Why the PSBR is self-financing

Article Abstract:

The PSBR is twice as high as the level needed to stabilise the ratio of outstanding public debt to national income. It will not be matched by an increase in national income or by a build-up in government assets. PSBR follows automatically from private sector behaviour. PSBR increase is financed by the increase in private sector financial surplus. While the private sector is saving during the recession it is alright to finance a high PSBR, but when the private sector might borrow during an economic recovery it is a different matter.

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Teething troubles for the new money team

Article Abstract:

The UK government is making clear to the Bank of England's Monetary Policy Committee its view that monetary policy remains too loose. This has been seen most recently in the 1998 Budget, which states that inflation has been above target rate most months and that it will require a great deal of effort to maintain low inflation. The Bank of England has so far been cautious on base rates, justifying this by pointing to the strength of sterling. However, this approach has caused the economy to become unbalanced.

Interest Rates, Inflation (Finance), Monetary policy, Inflation (Economics)

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How the soft landing could turn hard

Article Abstract:

UK politicians are beginning to realize that it will be necessary to tackle the excess of output and employment. However, they are still undecided about whether to subject the economy to a hard landing. It is becoming increasingly feasible that a hard landing will be required to reach the inflation target. The Bank of England's monetary policy committee is unlikely to impose a hard landing on the economy at this stage, but it could be adopting a more pessimistic view.

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