However, if you can see the BBC graphic in the story below, you will notice that the economy shrunk by 0.5% in the equivalent quarter in 2010. After that growth returned, 'caught up' in fact, so this may not be a return to recession. Remember one observation is not a trend.
What is clear is that growth is pretty flat and nowhere near the levels the economy needs. The Deputy Prime Minister, Nick Clegg, has called for a stimulus measure, raising the tax free threshold to £10,000. This will raise the disposable incomes of all tax payers, but the biggest effect will be on the low paid. They tend to spend a higher percentage of their earnings and so this will raise consumption and boost Aggregate Demand.
Would such a stimulus work? Well it depends on whether the tax cut is spent or saved. Also would a boost of £7 a week really help that much?
Doomed, we're all Doomed. But are, yes the economy did shrink in the last quater of 2011 but by only 0.2% which is a very small amount and therefore should be easy to fix. But with business and consumer conferdence so low and animal spirits could this be the news that sends the economy into a double dip reccession? only time will tell
ReplyDeleteExactly, we should compare this shrink to last year and take it as a profit, because if it keep on we will next year, finally, have a growth in economy by 0.1%. Furthermore, I would to rely them spending every week £7 more, and even if they would, this won't affect the economy that much,nas if you could find a way, to make the high roller spend more money, because, to be honest, the government is dependent to the taxes they get. But as spreckers said, time will tell, and we can just wait..
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