Britain, Back into the Storm?

As the world economy continues to crumble, countries and governments across the world face an uncertain and gloomy future. What’s more, prominent economists have continued to warn politicians that the worst is far from over when it comes to the growth slowdown that has afflicted global output for the past four years. England however, is in somewhat of a unique situation. Although its economy has been hit hard by the global downturn, many believe the country is on the path to recovery. Moreover, England’s economical and political distance from the troubled euro currency and the Eurozone debt crisis has kept investor confidence relatively high. It is in this context that some politicians have begun advocating fiscal tightening and a reduction of the national debt. While the British government does plan to increase the money supply to help the recovery, steep reductions in capital spending and other tight fiscal policies may hinder growth and hurl Britain into another recession. As we learned in class, monetary and fiscal policies are important in dealing with economic crisis, as was the case in the great depression. As Britain begins to stumble out of the Great Recession, it is important that politicians do everything in their power to ensure a steady and successful recovery

Ricardo Johnson

http://www.economist.com/node/21541021