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Q&A: Suggest and evaluate policies that the UK government can use to tackle the recession?
27th March 2009
Suggest and evaluate policies that the UK government can use to tackle the present recession?
This sounds a bit like a homework essay to me! So I won’t write a detailed answer to it but instead offer some links to recent blogs and other articles on this topic.
The recession is the direct consequence of the credit crunch and also a downturn in world trade and investment. The UK economy is highly open to trade and as such we are exposed to events across the world such as changes in commodity prices and the economic cycles of our major trading partners.
What can a government do to tackle the present recession? One obvious solution is to use a fiscal stimulus package and we have written about it on several occasions in this blog – for example here:
Is the Juice worth the Squeeze
Another important role for government is to keep trade flowing freely and avoid a descent into protectionism that in the long run will harm our economy.
Don’t forget that monetary policy can also play an important role – the Bank of England is in charge of monetary policy and they have been cutting interest rates (currently 0.5%) and have just started a process known as quantitative easing.
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.