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Sterling has today picked up sharply after weeks and weeks of pressure and selling by investors. This comes just ahead of the MPC meeting to decide their next move on UK base rates and until just a...
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Saturday 19th July 2008
After one of the longest periods of sustained growth in the UK economy for some time, voters are starting to ask why the country was so ill prepared for the downturn and exactly what is happening. Surely the boom years allowed enough money to be stored away for the lean times? Surely governments have learnt their lessons from the past?
The truth is that the Labour government were very vocal in their comments about disbanding the boom and bust scenarios, indeed they claimed to have ended the centuries old economic cycle. Times were good, property prices were booming, money was cheap and everybody in the UK seemed to be enjoying the good life. But what was happening behind the scenes?
While the economy was flying high and taxes poured in it seemed that the government were still spending more than they could afford on public services. National debt has been creeping up for some time (rumoured to be over £500 billion in total at this moment in time) but with low unemployment and rising wages nobody seemed to mind – like a credit card holder, it was easy to pay off the minimum amount from next months income.
However, taxes are now starting to fall, unemployment is rising and the housing market is literally on its knees. The government coffers are bare with no savings to show from the boom times and the threat of increased national debt now very much on the cards. |
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