Reasons for optimism
- A weak pound made British products cheaper, helping exporters.
- A powerful stock market rally boosted confidence [more].
- Unemployment rises have been smaller than forecast.
- Markets have welcomed Coalition efforts to tackle the deficit.
Reasons for pessimism
- The Government has embarked on savage public spending cuts that will dent demand.
- The Qunantitative Easing (QE) impact is unknown. It could stoke inflation, forcing rate rises to control it.
- British house prices remain over-valued.
- Western governments and consumers have built up colossal debts that could take more than a decade to clear. A full explanation.
- Western economies face a demographic timebomb which could erode the wealth of nations for a generation. [A picture of Britain in 2020]
- Libor – lending rate between banks and a measure of confidence in each other – is elevated [Libor latest]
But some people think that a zero growth economy could be a good thing.
Brian Czech, president of the Center for the Advancement of the Steady State Economy (Casse) says that the UK economy has already grown beyond its optimum size.
“There are too many problems caused by increasing production and consumption of goods and services,” he says.
Casse argues that growing the economy further creates social and environmental problems that outweigh its benefits.
“Lots of sacrifices come with growing GDP, such as working too long hours, the depersonalising of workplaces and spending on advertising to persuade people to buy more and more junk they don’t need,” Mr Czech says. https://www.bbc.co.uk/news/business-18967294
Read more:
https://www.bbc.co.uk/news/business-19060716
Economy watch: What caused the return to recession and how long will it last?
