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Transcript
Ups and Downs
To what extent is this the worst
economic downturn in over 30 years?
Nick Langston-Able
ESRC Festival of Social Science
The Future of Economics
Bristol University November 2011
www.economicsrevealed.co.uk
www.economicsrevealed.blogspot.com
The 1980s – a reminder …
Economic Growth
CHART 7.1: LONG TERM TRENDS IN GDP
ANNUAL % CHANGE
8
6
LONG TERM
AVERAGE
4
2
0
-2
-4
1956
1962
1968
1974
1980
1986
1992
1998
2004
Inflation
CHART 4.4: UK LONG RUN INFLATION 1960-2004
25
20
%
15
10
5
0
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
Interest Rates
CHART 6.2: INTEREST RATES - THE NEW STABILITY
18
16
14
12
%
10
8
6
4
AVERAGE FOR PERIOD
2
0
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
Unemployment
CHART 6.3: UNEMPLOYMENT (000s, ILO MEASURE)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1979
1982
1985
1988
1991
1994
1997
2000
2003
Government Spending
CHART 4.5: PUBLIC SECTOR CURRENT RECEIPTS, EXPENDITURE AND
BUDGET SURPLUS (% OF GDP)
50
CURRENT RECEIPTS
40
%
30
CURRENT EXPENDITURE AND DEPRECIATION
20
10
SURPLUS
0
DEFICIT
-10
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004
BoP Current Account
£ MILLION
CHART 17.10: THE CURRENT ACCOUNT
10,000
4
5,000
2
0
0
-5,000
-10,000
-2
%
-4
-15,000
-6
-20,000
-8
-25,000
CURRENT ACCOUNT (LHS)
% GDP (RHS)
-10
-30,000
-12
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004
Your very own recession

Is the current recession the worst in the last 30
years and is it the worst you will experience?
Economic Growth (worse)
Inflation (better)
Interest Rates (better!)
Unemployment (better)
BoP Current Account
(worse than 1980-82 but better than 1990-92)
Govt Borrowing (worse)
Government Spending Comparisons
Government Expenditure & Tax Burden (% GDP)
60
50
Tax Burden % GDP
Govt. Expenditure % GDP
30
20
10
te
d
St
at
es
do
m
Ki
ng
te
d
U
ni
U
ni
en
Sw
ed
n
Ja
pa
an
y
m
G
er
an
ce
Fr
ad
a
0
C
an
% GDP
40
Country (source: Heritage Foundation / Wall
Street Journal 2011)
Conclusion

The evidence suggests that the current
economic downturn is not as bad as previous
downturns. Inflation is much less of a problem,
interest rates are low and whilst unemployment
is high, it has still not reached levels seen in the
1980s and early 1990s. Put simply – we’ve had it
worse.
Conclusion 2

The evidence suggests that this is indeed the
worst economic downturn in over 30 years.
Whilst there has been less of a problem with
inflation and high interest rates, unemployment
is almost as high and may well still rise. The
government is also running a large budget
deficit in addition to the UK experiencing a
reasonably large current account deficit. Put
simply – we’re doomed.
Conclusion 3

The extent to which this is the worst economic
downturn in over 30 years is up for debate.
There are a number of indicators which suggest
this may be the case but equally there are other
indicators which suggest that the UK
experienced worse problems in the 1980s and
1990s. It is also difficult to judge the nature of
the current downturn in terms of whether the
UK is past the worst and how long a recovery
might take. Put simply – dunno really.
Thank You
Nick Langston-Able
www.economicsrevealed.co.uk
www.economicsrevealed.blogspot.com