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Monthly Archives: October 2010

The internet accounts for 7.2% of UK GDP

This is the finding of a report by the Boston Consulting Group (BCG) on behalf of Google. They maintain that the internet is worth £100bn a year to the UK and this does not include the £360bn a year business-to-business market. The report says that if the internet was a sector of the economy it would be the fifth largest … Continue reading

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Sterling, economic growth and interest rates

One immediate effect of the 0.8% rise in UK economic growth during the third quarter, which was announced yesterday, was an upward valuation in sterling. The pound rose by about 1.5 cents against the dollar and stands at $1.5814 this morning, according to Reuters. The pound has now risen by almost 2 cents this week. The story is the same … Continue reading

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Surprise lift for UK economy

The UK economy grew by 0.8% in the third quarter of this year, following 1.2% growth in the second quarter. Most analysts had been predicting a growth figure of around 0.4%, so this is obviously good news. But, we need to bear in mind that these are provisional figures and are subject to revision at a later date. I have … Continue reading

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So where are we now?

The dust has started to settle after the draconian cuts put forward by the Chancellor, George Osborne, last week, as he put forward plans to cut government spending by £81 billion over the next four years. Was he right to make cuts of this magnitude? The UK borrowing figures last week might suggest that he was. The figures show that … Continue reading

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China raises interest rates, MPC divided.

China has announced its first rise in interest rates for three years. According to the People’s Bank of China, its one-year lending rate goes up from 5.31% to 5.6% and its one-year deposit rate also rises from 2.25% to 2.5%. Why has China done this? In recent years double-digit rates of economic growth have become familiar in the country. In … Continue reading

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The truth about global exports

When we try to explain Ricardo’s theory of comparative advantage we invariably use a two country, two product example. Two hundred years ago, when Ricardo first put forward his theory of international specialisation and trade, it was really that simple. We produced something wholly within our country and sold it to their country. They produced something different, completely within their … Continue reading

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Global investment flows have seen serious cutbacks this year.

One would have hoped that the reining back in government expenditure around the world might have been offset by increases in foreign direct investment (FDI). But figures published by UNCTAD yesterday in their Global Investment Trends Monitor No.4, show that this hasn’t been happening. Flows of global FDI actually fell in the second quarter of 2010. In fact UNCTAD’s FDI … Continue reading

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Unemployment – the lull before the storm

Good news on the unemployment front – or is it? Latest figures from the ONS today show that in the three months to August 2010 the number of unemployed fell by 20,000, to reach 2.45 million. This gives an unemployment rate of 7.7%, which is down 0.1% over the quarter. Male unemployment fell by 56,000 on the quarter, but female … Continue reading

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Inflation above target for 10 consecutive months

I remember hearing a story in the US of a barn which was covered in targets and each target had a bullet hole straight through the middle. A passing tourist was really impressed until the farmer told him that he just shot into the barn at random and then placed the target around the bullet hole. Perhaps it is time … Continue reading

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International Monetary Fund powerless to act

The word ‘war’ has been on the lips of international negotiators in recent months. This is nothing to do with Afghanistan or Iraq, but is just as significant. This is about the possibility of a global currency war. There are imbalances in the global economy which were at the heart of the recent collapse of the world economy. What are … Continue reading

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