The Centre for Economics and Business Research (CEBR) released a report suggesting that interest rates in the UK will remain low for the next several years. The report also predicted that the pound could fall to US$1.40 while possibly tumbling below one euro within the next year.
The CEBR believes that the government will be forced to introduce a policy of decreased public spending combined with a series of tax hikes in order to balance the nation’s budget. This would hamper – for the short term at least – public growth and would force the Bank of England to maintain lower interest rates even as other countries begin to raise rates to hold back inflation.
“We are likely to see an exciting policy mix, with the fiscal policy lever pulled right back while the monetary lever is fast forward,” said Douglas McWilliams, CEBR chief executive and one of the report’s authors.
“Our analysis says that this ought to work. If it does so, we are likely to see a major rerating of equities and property which in turn should stimulate economic growth after a lag.”
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Latest posts by Scott Boyd (see all)
- Japan’s Demographic Trap - 25 June 2012
- Officials Talk Openly of Greek Euro Exit - 16 May 2012
- Greek Voters Prepare to Roll the Dice - 15 May 2012