Friday, February 22, 2008
Economists warn on output/inflation trade off, but play down fears of 1970s’ scourge
The UK is now experiencing a mild form of stagflation, experts have claimed. Stagflation - a combination of a stagnant economy and high inflation - was the scourge of the global economy in the 1970s.Ross Walker, UK economist at RBS, said: "What we have now is nothing like the 1970s, but by the standards of the last decade, we have above-target inflation and slowing growth. "The output/inflation trade-off has deteriorated. For a given amount of growth in the economy, there is more inflation."Mr Walker was commenting after the Bank of England published its February Inflation Report last week.It predicted UK growth would slow sharply to less than 2 per cent by the end of the year.