UK News

Insights from the UK and beyond

from MacroScope:

Slowing growth, MPC splits? That’s so 2008

Sixties nostalgia was all the rage in the late 90s, and towards the end of the last decade we looked back only 20 years or so for a massive 80s revival in electronic pop and fashion.

INDONESIA/With the 2010s in full flow, the current vogue of choice derives from just two years ago – at least among those noted trendsetters, economists.

Back in mid-2008, the signs for the UK economy were confusing and ominous. Inflation was too high, forward-looking indicators pointed to a slowdown of some sort in the near future, and the July minutes of the Bank of England’s monetary policy committee showed they debated both easing and tightening interest rate policy.

Step forward into 2010. In Wednesday’s July MPC minutes they discussed both easing and tightening while digesting a puzzling picture of – yes – high inflation and forward-looking surveys pointing to a slowdown of some sort in the near future.

from MacroScope:

Some good econ reads from the Blogosphere

From the econ blogosphere:

UK BUDGET
-- The libertarian Adam Smith Institute says here that the UK government should look at every government job, programme and department, and ask whether they are really needed. "Do we really need new school buildings....? Should taxpayers really stump up for free bus passes, or winter fuel and Chistmas bonuses for wealthy pensioners?"

CHINESE FX
-- VOX publishes this post from senior research fellow Willem Thorbecke of the Asian Development Bank on China's latest move on the dollar peg. "China's action may facilitate a concerted appreciation in Factory Asia, helping the region redirect production away from western markets and towards domestic consumers."

from MacroScope:

Live Blogging G20

Finance ministers from the G20 are meeting in London on Friday and Saturday to discuss the next steps in battling the world's worst economic and financial crisis since the Great Depression.

Reuters correspondents from around the world will be at the event, taking you behind the scenes and and providing unprecedented coverage through this live blog.

Is a 1.8 percent inflation rate good or bad news?

Photo

- Sumeet Desai, Reuters senior UK economics correspondent. -

Inflation unexpectedly held steady in July, official data showed Tuesday, but economists still expect big falls in the annual rate this year and monetary policy to stay loose for some time to come.

Is a 1.8 percent inflation rate good or bad news?

from MacroScope:

UK house prices close to a trough?

MacroScope is pleased to post the following from guest blogger Simon Ward. Simon is chief economist of Henderson Global Investors in London and previously worked for New Star Asset Management and Lombard Street Research. His own blog is Money Moves Markets.

UK house prices are no longer expensive relative to a measure of "fair value" based on rents. Prices fell significantly below fair value during the major house price busts in the 1970s and 1990s but a big undershoot is unlikely in the current downturn because low interest rates will limit forced selling.

from MacroScope:

Punctured Britain

If British chancellor Alistair Darling now occasionally tires of being reminded of his party's erstwhile promise of  "no more boom and bust", he won't thank British accountancy firm Grant Thornton  for sending journalists a bike puncture repair kit.

Billed as "Darling's economic repair kit -- fixes deflation in all business cycles", the marketing gimmick highlights the serious challenge facing Darling as he prepares to deliver his annual budget to parliament on April 22.

from MacroScope:

Waiting for the G20 to….?

Finance ministers and central bankers from the G20 meet this weekend in the English countryside to discuss the world's financial and economic crisis. With this in mind, MacroScope asked a number of economists what they want to see from the meeting and the G20 summit to follow later and what they expect to see.

The answer, in short, appears to be that much is needed but not much expected.

Paul Mortimer-Lee, head of market economics, BNP Paribas:

"There will be progress on agreeing that regulation needs to be more effective and more effectively co-ordinated on a global scale but I am unconvinced we are going to go a long way further.  Some populist posturing on bank bonuses etc should be expected. The less is achieved in other areas the more this will get played up. On bank recapitalisation, they will all agree strong capital is a good thing, but in no way do I expect a concerted plan -- it's driven by events and the exigencies of the local banking system.

from Global Investing:

And the next Iceland is…

If there's one thing you don't want to be, it's the next Iceland.

Since its currency, colossally indebted banking sector and economy collapsed in spectacular fashion in October, the country has become a byword for an economy that has truly hit the rocks.

Within weeks, banking problems and currency falls meant Hungary was being hyped as a "second Iceland", at least until a joint International Monetary Fund and European Union rescue package restored some stability.

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