Article Abstract:
The next UK government will have to take firm action if it is to prevent rising inflation from accompanying falling unemployment, according to Dr Alan Budd, chief economic adviser to the UK government. If the next chancellor manages to achieve both falling unemployment and inflation, then GDP growth will be strong and it could be possible to reduce taxes or increase public expenditure. However, if this is not achieved, then it will not be possible to reduce taxes or boost public spending.
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Article Abstract:
Many observers feel that the UK has generally not reacted quickly enough to changes in the economic climate, and has then extended interest rate changes over far too long a period. Undertaking too little at a late stage has probably been responsible for the economic instability which the UK has been experiencing over recent years. It is now time for the government to consider acting more decisively and earlier in response to changes in the economic climate.
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Article Abstract:
It is likely that the UK Treasury is putting considerable pressure on the chancellor to clarify the likely course of economic developments. At present, there is still considerable uncertainty about the impact of economic policy. Domestic demand remains unpredictable, although the prospects for real growth in 1996 seem reasonably good. The main area of doubt is still the amount of spare capacity which exists in the economy.
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