Saturday, February 6, 2010

Britain has been hit harder than you think

That's the view of Samuel Brittan: See here.

There's much good stuff to read in here, including theories on how big the output gap currently is - that's the difference between actual and potential output.

Also, he comments on why unemployment has not rised as much as people expected - the theory is that firms have hoarded labour instead of firing people (as has happened in the US). So if the recovery doesn't start soon and keep going, there may be more job losses as firms give up waiting and fire the workers they had been hoarding.

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