Economics Weekly by Lloyds TSB

The credit crisis and the onset of global recession have focused policymakers’ attention on how to remedy the economic imbalances both within and across countries.

The credit crisis and the onset of global recession have focused policymakers’ attention on how to remedy the economic imbalances both within and across countries. Within the UK, the main focus has
been on the imbalances in the household, financial and public sectors. But the non-financial corporate sector balance sheet also has a crucial role to play in the current downturn, and the prospects for this sector, perhaps more than any other, are likely to determine both the breadth and depth of the economic downturn. Through the wages and taxes it pays, and the profits it generates to fund dividend payments and productive investment, the nonfinancial corporate sector lies at the very heart of the UK economy. Without a sustained improvement in business investment, there can be little prospect of a recovery in employment, output or spending or, for that matter, a material improvement in government, household or financial sector balance sheets.

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