Why is our economic performance so good? This is one - charming - theory.
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7 hours ago
Thursday, 6 August 2009
Britain is doing very well - here's why
Paul Krugman has been cheerleading for Britain for a while. I'm not sure I agree with him that the pound is cheap, but it's good to see we that some of our signs of robustness are visible from outside.
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3 comments:
Leigh,
Is there any more information about the effect of the VAT decrease?
Don the libertarian Democrat
Hi Don
I haven't heard anything more since April, but the view then (from the CEBR) was that it looked likely to provide a boost of £8-9 billion (about 1.5%) to retail spending.
My own suspicion is that, while it may have had a small direct impact on consumer buying decisions, its main importance was similar to that of automatic countercyclical stabilisers. It simply leaves more money in people's pockets, enabling them to consume more or to increase their savings, either of which will assist the recovery.
Thanks Leigh,
Don
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