Came across this article in The Times which should be of interest, following the discussion in our Year12 lesson today. The title of the article ' Punish savers and make them spend money' emphasises the author's view that to save will only make the recession worse and with interest rates so low, there is no real incentive to save. 'Instead of reducing taxes on interest payments, (as the Conservatives have proposed) the Government could tax all bank deposits and other risk-free savings. This would create a negative risk-free interest rate, encouraging savers either to invest in property, shares and other productive assets - or simply to save less and consume more. In either case, the result would be more consumption and physical investment, less unemployment and faster recovery from the slump. 'What do you think?
1 comment:
Consumers need to be reassured that everything will be okay for them to spend though because they're scared of losing jobs hence why they want to save as much as they can. It is natural for consumers to want to save at a time like this. The media have a big role when it comes to this, they were the ones that emphasised the recession at the beginning hence why consumers cut down their spending. Confidence needs to be raised to get consumers spending..
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