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Worst of recession may be over, but then again maybe not

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The newest member of the Bank of England’s Monetary Policy Committee, which meets once a month to decide what to do with interest rates, claims that the worst may be over for Britain’s economic recession. Confusingly, however, he says that his comments should not be taken as a prediction and gives little evidence to back up his claim.

David Miles, a former senior economist at Morgan Stanley will replace David Blanchflower on the MPC in a month’s time.

In a press interview, Miles said “Economic history teaches us that a combination of tax cuts, running large fiscal deficits, substantial cuts in interest rates and more quantitative easing is likely, with a certain time lag, to have a substantial impact on demand in the economy and it may well be that the worst of the recession may well be behind us,” but followed these comments up with the warning that they were “not a confident prediction but a judgement about what may be the case”.

Anybody with a clue about what exactly that means is welcome to leave their explanation down in the comments box. Just what the economy needs, more cloudy vagaries and impenetrable observations from the people who are supposed to know what they’re doing.

  1. Does it maybe mean that “we’ve done all we should have in the time up until now and we’re just waiting for it all to take effect”?

    In Australia, we have budgets in May but our tax time starts at July so pollies often say it takes 18months for anything to result, as I’m sure you are aware. Here though, if you have tax payable (individuals) it is not due until the 15th of May the next year.

    We’ve also been given $900 payments if we paid tax in the previous year to boost spending. As someone in my office said after it was announced, “When will that take affect?” My only guess was that it might stimulate the GST [your VAT] in the short term. She then said, “What, so the government only gets 1/11 of what we spend?”

    It’s the only thing that is paid regularly by businesses that is a result of immediate sales, not tax instalments based on last years results.

    But then I’m no economist so feel free to ignore or criticise what I just wrote.