Will the UK economy mirror the US?
As the US economy starts to stabilise, and appears ready to form a base for the future, there is a growing feeling that the UK is headed in a similar direction. Even though the UK economy may in the minds of many economists be slightly ahead of the US, in that a stabilisation period seems to have been initiated some weeks ago, there is a feeling that the journey of the two economies to recovery will be very similar indeed.
The UK authorities have for some time been aware of the threat of deflation in the short term and inflation in the medium to longer term. While they appear to have monetary policies available and ready to go for each event, putting them into practice is a lot harder than discussing them in principle. As and when the UK economy does finally recover there will be little margin for error as the authorities about turn with regards to their monetary policies and look to control the eventual recovery in the UK.
In many ways the US economy will be the fuse which lights the recovery in the worldwide economy and all eyes will be on US economic data over the weeks and months to come.
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