Friday, February 22, 2008

Economists warn on output/inflation trade off, but play down fears of 1970s’ scourge

Experts claim UK is suffering 'stagflation'

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.

Posted by jack c @ 03:10 PM (850 views)
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5 thoughts on “Economists warn on output/inflation trade off, but play down fears of 1970s’ scourge

  • True; “What we have now is nothing like the 1970s”; in the 1970’s we were a manufacturing based economy, now we are a mortgage debt driven economy, so where do we go from here?

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  • @enuii – valid point – we’ll probably become a debt recovery economy

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  • Three options really dependent upon how the BoE play with interest rates. High inflation, stagflation, or recession. Any of them basically result in reduced living standards for most of us. How best to weather each of the three potential options is the question I have.

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  • This is a difficult one.

    Attracting money to the City by any means seems to have become the driving force in recent years and we have a situation where the UK is now basically the largest money laundering centre in the world, hence all sorts of walks of life are in the UK along with their money. I don’t think realistically this is unknown or in question. Add to this the Property Boom and all it requires is the best organised bunch that supply the appropriate laws and completely lack conscience. There is no shortage of this requirement in modern politics and it’s spreading all over the world.
    The biggest signs of (I prefer to use) Stagnation are : First you sell all your property. Then you sell all yourself. Or is it the other way around? So looking at at the evidence and looking on the bright side : We’ll be lucky if it’s just Stagflation.
    Anyway no matter. It’s a race between this and Climate.

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  • larry pickleman says:

    I run a lovely little economy free service in brighton called freecycle.org…I wonder if people will start hogging again!?

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