Confronting the UK's trinity of deficits
THE unlucky winner of the UK election on May 7 will face three big economic headaches, focusing on a not-so-holy trinity of deficits in the public sector budget, the balance of payments current account and the finances of UK households.
The new government, undoubtedly another coalition, will need a balanced approach to reducing all these deficits. Too sharp a cut in government and household spending, if not accompanied by an improved balance of payments, could kill the goose expected to lay the golden egg, namely a balanced budget at some time in the future.
British exports could be helped along by some green shoots in the euro area although sterling's uncompetitive exchange rate vis-à-vis the euro - still well above 1.30 euros despite weakness in recent days - will reduce the positive effect.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Columns
‘Competition for talent’ a poor excuse to keep key executives’ pay under wraps
OCBC should put its properties into a Reit and distribute the trust’s units to shareholders
Why a stronger US dollar is dangerous
An overstimulated US economy is asking for trouble
Too many property agents? Cap commissions on home sales
Time to study broadening of private market access