Orthodox economic solutions are nearly exhausted - what next?
As we see UK base rates fall to 1.5% there is concern that the UK government will be forced to use more unorthodox and risky initiatives in its mission to refloat the UK economy. Indeed only yesterday evening we saw speculation that the Treasury is on the verge of printing more money as a means of combating deflation in the UK and even though this has been denied, a Treasury spokesperson confirmed the idea was under consideration. So what next?
When you consider that we have seen everything from VAT reductions to confirmation that the government will pay its bills on time it would appear we could see yet more unorthodox economic strategies implemented in the short to medium term. Gordon Brown appears to like the idea of going against the norm but the only problem at the moment is the fact that his ideas have yet to kick in and there has been no real benefit to either UK economy as a whole, or UK consumers.
There were rumours of a "scorched earth approach" some time ago suggesting that Gordon Brown would try anything in the book (and out of the book) to kickstart the UK economy, in the knowledge that if he failed a likely Conservative government would have very little room for manoeuvre. Whether this is correct or not is debatable but the risk factor is increasing with every additional pound added to the rescue package.
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