| Author (Corporate) | Organisation for Economic Co-operation and Development (OECD) |
|---|---|
| Publisher | OECD Publishing |
| Series Title | Policy Brief |
| Series Details | June 2009 |
| Publication Date | June 2009 |
| Content Type | Journal | Series | Blog, Report |
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The world economy is being buffeted by several shocks. The United Kingdom, like most OECD economies, is in a deep recession. House prices have fallen after an extended period of large increases which left many households over-extended. Financial conditions are tight, and the financial market crisis has threatened the stability of the financial system. External conditions are also highly unfavourable. The recovery is likely to be slow and unemployment is expected to climb significantly. Both monetary and fiscal policies have eased to cushion the severe downturn with the policy rate now at historically low levels and quantitative easing measures under way. The authorities have also moved quickly to introduce a wide range of measures to stabilise the financial system. In the short term, the policy priority must be to further improve conditions in credit markets. This is essential for reviving the economy. Alongside this, policy should aim at damping the severity of the downturn and its impact, particularly on the labour market. Policy actions that could undermine longer-term objectives need to be avoided. Over the medium term, fiscal consolidation needs to be underpinned by an effective fiscal framework and financial market regulation and supervision needs to be overhauled. The financial crisis and its consequences are likely to lead to a permanent fall in the level of potential output. Therefore, measures to raise long-run living standards will have renewed importance. |
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| Source Link | http://www.oecd.org/dataoecd/4/59/43037700.pdf |
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| Countries / Regions | United Kingdom |
