Why some economists worry when unemployment gets too low
While doomsday warnings about the Chinese economy run rampant in the Western media, it is quite likely that the Chinese government will, in fact, be able to manage the economic, social and political tensions it faces.
Article of the week (part 2), courtesy of Darcey Edkins (summary to follow).
Despite rapid economic growth in the Philippines in recent years, unemployment remains a problem, the Financial Times reports.
Article of the week (part 1), courtesy of Darcey Edkins (summary to follow).
Essential viewing for AL students (also useful for IB). You are expected to be up to date with current UK economic performance and forecasts. Don’t forget to subscribe to the the T2U channel – many very useful video presentations.
The UK is introducing a different measure of inflation to better reflect everyday price changes which will include the cost of owning a home.
Today’s jump in inflation is more to do with low prices last year than it is to do with the collapse in the value of the pound. That is still to come.
An increase in the rate of inflation hurts borrowers and those on fixed incomes as inflation erodes the value and purchasing power of money. On a personal note, my drive to school is becoming increasingly expensive as the price of oil recovers from the lows of 2015. The fall in Sterling will see prices at the pump rise further. However, there are winners. Borrowers will see the real value of their debts fall. The Government, as the UK’s largest borrower, will be one of the beneficiaries.
Still, the higher price of imported goods may end up hurting exporters, the direct beneficiaries of the fall in the value of the Pound. Although the price of British goods in foreign currency terms is falling, the costs of imports are rising, so British exporters may see their costs of production rise offsetting, to some extent, increasing profits thanks to higher foreign demand.
At present, the inflation rate remains below target, so, perhaps, a little more inflation is good thing. However, when the rate rises above target the MPC will be under pressure to hike the bank rate. The UK debt mountain has grown rapidly thanks to access to very cheap credit, higher rates will hurt those with large mortgages, car loans, credit cards, etc, and we could see the UK slip back into recession as result of a collapse in consumer spending.
The UK’s inflation rate rises to an 11-month high in December, with a sharp rise in air fares offsetting falling food and clothing prices.
Article of the Week: Arsenii K.