Article by Investazor.com
United Kingdom is barely keeping its worrisome economic situation under control. The unfavorable conditions given by the worldwide difficulties are making the U.K. recovery more difficult to be accomplished. If China, Australia and United States are growing at a relatively good pace, U.K. still produces 3%, less than it did five years ago, mainly because of the poor situation of the Euro zone. Looking at various sectors of the economy, traces of a hard struggle to resist to the recession are visible: 7.8% jobless rate as well as a significant breakdown of the business climate.
As current measures that are considered in order to deal with this situation, we can enumerate:
- Keeping the interest rate at 0.50% until the labour market will significantly improve (means falling below the threshold of 7% jobless rate in order to start speaking about a possible decision in the interest rate’s value);
- Rebuilding the confidence imagine of the bank in order to be able to better serve the economy with credits (capital ratios need to reach a threshold of 7%);
British officials are very much confident in the forward guidance and the set of rules that has been established so far. Approaching the situation in a realistic manner, U.K. is expected to recover in a slow pace, being required another 2 or 3 years before breathing easy. The inflation is thought to be kept under control and is expected to get to normal parameters by evolving in a natural rhythm. Strong assurance came from the Governor Mark Carney who is willing to take any action, including adding stimulus, if the situation requires it.
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