The Governor of the Bank of England, Mervyn King, has signalled that the next year may be the toughest for 15 years with lower economic growth than previously forecast. So, is the UK economy going off the rails?
Is British economy going off the rails? Times Online (18/11/07)
UK heads for worst growth in 15 years Times Online (18/11/07)
Bank’s grim warning over UK economy Guardian (15/11/07)
Black clouds loom on horizon after years of plenty Times Online (22/10/07)
Questions
| 1. | Explain the main reasons why the Governor of the Bank of England expects a worse than forecast level of economic growth in 2008. |
| 2. | Discuss the extent to which a cut in interest rates will help prevent an economic slowdown. What adverse effects could follow from such a policy. |
| 3. | Discuss one other policy that the government could adopt to try to reduce the extent of the forecast slowdown in economic growth. |