Review of the quarter's economic trends [May 1983]

Kirwan, Frank and Bell, David and Buchanan, Bob and Crawford, Robert and Harrigan, Frank and Jowett, Anne and Moar, Lyle and McGilvray, James and McNicoll, Iain and O'Donnell, Noreen and Simpson, David and Tait, Elizabeth and Walker, Jim and Wingfield, Alison (1983) Review of the quarter's economic trends [May 1983]. Quarterly Economic Commentary, 8 (4). pp. 1-10. ISSN 0306-7866

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    Abstract

    The one thing this recovery does not lack is confidence. Surveys of business opinion in all the major economies reveal a greater level of optimism amongst the business community than at any time since 1979. But confidence alone is not adequate for a sustained recovery though it certainly helps. As this brief analysis shows, two constraints stand in the way of a worldwide upturn: real interest rates remain high and the response of governments to any acceleration of inflation remains unknown. The downward rigidity of nominal interest rates bears witness to the financial markets' belief that present low levels of inflation are not sustainable, yet if governments react to the expected mild acceleration of inflation in the latter half of this year with the policies of the recent past no significant recovery is likely. Further analysis of UK and world economic data are provided.