Hostname: page-component-586b7cd67f-t8hqh Total loading time: 0 Render date: 2024-11-22T23:29:46.905Z Has data issue: false hasContentIssue false
  • English
  • Français

Commentary: The Savings-Investment Balance: Is there a UK investment shortfall?

Published online by Cambridge University Press:  26 March 2020

Martin Weale
Martin Weale*
Affiliation:
CBE, MA, Cantab, Hon. F.I.A.; Director, NIESR
Get access Rights & Permissions [Opens in a new window]

Extract

In the first half of this decade, the world experienced a period of low short and long-term interest rates. Shortterm rates have risen from these low levels, first in Canada and the United Kingdom, then in the United States and finally in the Euro Area. Long-term rates, by contrast, remained low, suggesting that holders of longterm debt expected the rise in short-term rates to be only temporary. Only in the past few months has the apparently anomalous pricing of long-term debt started to disappear. But with interest rates on long-term debt similar to short-term market rates internationally, the market does not yet show that the traditional upwardsloping yield curve and, on this basis, long rates remain depressed. They are also markedly below the levels of two to three years ago.

Type
Article Commentary
Information
National Institute Economic Review , Volume 196 , 01 April 2006 , pp. 4 - 9
Copyright
Copyright © 2006 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Barrell, R. and Pain, N. (1997), ‘Foreign direct investment, technological change, and economic growth within Europe’, Economic Journal, 107, pp. 1770–86.CrossRefGoogle Scholar
Bunn, P. and Trivedi, K. (2005), ‘Corporate expenditures and pension contributions: evidence from UK company accounts’, Bank of England Working Paper No 276, http://www.bankofengland.co.uk/publications/workingpapers/wp276.pdf.CrossRefGoogle Scholar
Campbell, J.Y. (1996), ‘Understanding risk and return’, Journal of Political Economy, 104, pp. 298–345.CrossRefGoogle Scholar
Hayashi, F. (1982), ‘Tobin's marginal and average Q: a neoclassical interpretation’, Econometrica, 50, pp. 213–24.CrossRefGoogle Scholar
IMF (2005), ‘Global imbalances: a saving-investment perspective’, Chapter II in World Economic Outlook, pp. 91–124, and Data Appendix.Google Scholar
King, M. (2006), Speech on 16 January, Ashford, http://www.bankofengland.co.uk/publications/speeches/2006/speech263.pdf.Google Scholar
Pomerantz, O. and Weale, M.R. (2005), ‘Are we saving enough? The macroeconomics of the savings gap’, National Institute Economic Review, 191, pp. 79–93.CrossRefGoogle Scholar
Profitability of UK Companies (2006), ONS Press Release 4 April.Google Scholar
Rosewell, B. (2006), Response to Question 19 to Expert Witnesses, Treasury Select Committee, 27 March 2006, http://www.publications.parliament.uk/pa/cm200506/cmselect/cmtreasy/uc944-i/uc94402.htm.Google Scholar
UK Economic Accounts, Quarter 4 2005, ONS.Google Scholar