Chancellor’s ‘Reset’ Leaves UK Economy Exposed And Vulnerable

To understand why, we need to consider how past policy has got us to where we are. In the past, slow or negative growth has been tackled largely through monetary policy: lowering interest rates to incentivise consumers and investors to take out credit in order to maintain levels of spending in the economy, reducing economic contraction and speeding up recovery.
Yet historically, interest rates have tended not to recover their pre-recession levels before being cut again in response to the next downturn. As a result, the economy has simply adjusted structurally to cheaper and cheaper levels of credit. Each subsequent downturn has required interest rates to fall further and further, and starting from an ever lower base each time – like an antibiotic slowing losing its potency.

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