Andrew Balls criticises UK economy
Andrew Balls, head of European investments at Pimco and brother of Labour minister Ed Balls, has today issued a research note in which he is highly critical of the way that the UK economy is being handled. Like so many economists in the UK he believes that the threat of inflation could take second place behind the need for growth in the UK economy, something which could store up problems for the UK government in the future.
He believes that the Bank of England is unlikely to increase base rates in the short to medium term, as this could potentially curtail a recovery, thereby placing pressure on the inflation number which could rise in the short to medium term. If the timing is incorrect we could see inflation take off before the Bank of England is ready and willing to increase base rates, to reduce credit, and this could have a major impact on the medium term performance of the UK economy.
There are so many different issues to consider for the Bank of England and the UK government and ultimately because nobody in the UK has ever experienced these wild swings in economic performance it is difficult to know what to do. Timing will be of the essence and if the Bank of England moves UK rates too high too quickly the recovery could be curtailed, but if rates remain low for too long then inflation could cause major problems in the medium term.
Share this..
Related stories
UK exchange rate moves to five-month low
The Bank of England has today issued a rather negative report on the UK economy which would suggest that the current exchange rate, especially the pound to the euro and the dollar, is unsustainable in the short term. As a consequence, the UK currency has fallen to a five-month low against both of these leading currencies and there is an expectation of further downside in the short to medium term....
Read MoreGuardian newspaper changes sides to Liberal Democrats
As we approach the tail end of the UK election campaign the former Labour supporting Guardian newspaper has today announced its support for the Liberal Democrat party. This is a major blow for the Labour party and has surprised many in the political arena who had automatically assumed that the Guardian newspaper was once and for all a Labour Party supporter. So what has changed? If we take a lo...
Read MoreGordon Brown slams Conservative economic policies
Gordon Brown has today gone on the attack suggesting that Conservative economic policies throughout the UK recession have been wrong on every occasion and his own determined efforts to help the UK economy have proved right. Historically the Conservative party has been the more trusted of the political parties with regards to the economy although over the last decade we have seen a change in this p...
Read MoreMPC split on prospects for UK economy
Minutes from the last Bank of England monetary policy committee meeting show that while all members were in favour of retaining UK base rates at 0.5% there is a difference of opinion regarding inflation and the threat from Europe. Some members of the committee believe that inflation in the UK could squeeze higher due to less "slack in the economy" than first thought, while others believe that cred...
Read MoreUK bonuses almost at pre-crisis levels
26/08/2015 Bonuses UK workers received in the year 2014/15 were almost as high as pre-financial crisis levels, according to figures from the Office for National Statistics (ONS). The figures show that in 2014/15 bonuses were only 0.1% below the record level they reached in 2007/08. In the finance and insurance sector, bonuses were below pre-financial crisis levels, but in the rest of the eco...
Read More