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As the UK economic turmoil continues there is hope today that we may finally have seen the end of the boom and bust economic cycle if UK authorities learn by their recent mistakes. But is this...
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Friday 15th August 2008
The ongoing reduction in economic activity in the UK is worrying but it seems as though the Eurozone is fairing worse with France and Germany seemingly in big trouble and heading for recession. It is very interesting to see that while the Eurozone had held up for so long it has now gone into something of a nosedive and is heading for a technical recession. So will the UK bounce before the Eurozone?
While it is not certain which economies will fall the furthest and which will bounce back the quickest, you would normally have expected the UK to turnaround first due to the fact it seems to have fallen first. However, with inflation higher in the UK than the Eurozone in general and the Bank of England unable to reduce interest rates to kick start the economy, the situation is not that clear.
When you also throw in the fact that the UK budget deficit has never been higher in recent times this leaves very little scope for public sector investment to bring us out of the likely recession. Whether the UK would have been better taking the Euro as the currency of choice and being fully integrated into the Eurozone is uncertain and open to debate, but it would not be a surprise to see the UK economy still languishing as the Eurozone picks up some time next year. |
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