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The UK economy has experienced the most prolonged decline in real GDP on record. GDP is still lower than before the start of the great recession in 2008. This unprecedented recession has been prolonged – despite a sharp depreciation in the Pound, and a raft of unconventional monetary policies. However, recent statistics suggest there are some reasons to be more hopeful and the UK economy is starting to recover with better stats in GDP, and manufacturing output. Yet, despite the recovery, many analysts still worry that the economy is unbalanced and could be vulnerable to a further economic downturn in Europe and the rest of the world. More on the UK recovery
I'm sure the government will be giving itself a lot of credit for the recovery over the next few months. But, it is worth bearing in mind GDP is still below its peak. Be suspicious of anyone who uses monthly growth figures to prove or disprove the success of particular economic policies. If you have a severely depressed economy, eventually there will be some kind of recovery. But, that doesn't mean vindication of policies which prolonged the recession.
Unexpected wealth can be bad for an economy
I’m currently reading A History of the World by Andrew Marr (it’s a good read so far). There’s an interesting chapter about the consequence of Spain gaining a large quantity of gold and silver from the Incas during the Sixteenth Century. Almost overnight, Spain became very rich taking home unprecedented quantities of gold and silver. Yet, there's a pretty good thesis that this 'easy money' held back the Spanish economy over the next few centuries. A salutary reminder that easy wealth can create it's own problems. Perhaps karmic justice for stealing other people's gold too.
What happened to the Spanish gold from the Incas?
Why are UK House prices so high?
In the past five years, we have had a devastating global credit crunch, the longest and deepest recession since the 1930s (if not worse). Across Europe, we have seen mass unemployment and in countries like Spain, Ireland and Portugal, the housing market has seen up to 50% falls in house prices. Yet, despite this financial and economic upheaval, UK house prices have bucked the trend and avoided a major collapse that many were predicting as the credit crunch hit.
The perennial dinner party conversation starter - why are UK house prices so high?
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