Does the new paradigm apply to UK?

Article Abstract:

Some economists have identified a new economic paradigm in the US, with the economy being able to operate with a constantly lower level of unemployment than in past cycles without sparking off a rise in inflation. There is some evidence that this paradigm also applies in the UK. There are no indications that the surge in productivity on which the new paradigm in the US has been based has also taken place in the UK. However, the overall performance of the UK economy in the 1990s has been as good as that of the US. This is because the behaviour of the labour market has improved more in the UK than in the US.

United Kingdom, Government domestic functions, Forecasts, trends, outlooks, Administration of General Economic Programs, Economic Planning & Research, Analysis, Economic conditions, United States economic conditions, Labor productivity

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Unpleasant arithmetic for the UK

Article Abstract:

The UK Labour party took on an economy that was about to see a substantial downturn when it came to power in May 1997. This downturn will be cyclical, rather than structural. There are already indications of economic problems ahead. Private sector pay is rising by 6.2%, and this cannot be consistent for very long with an inflation target of 2.5%. It is clear that output is now above trend, and underlying inflation will inevitably rise if the situation is allowed to continue.

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