As the economy moves into 1990, the outlook is precariously balanced between the risks of recession and inflation, with trends in pay settlements the key to future developments. There is a clear worry that if pay increases are not contained, as demand and and productivity fall off during 1990, pressures on prices will not moderate rapidly. Companies, already faced with a burgeoning financial deficit and a squeeze on profits and liquidity, may then be forced into a period of intense labour shedding, thus tipping the economy towards recession. The intensity of pressures in the labour market have once again raised the spectre of stagflation, albeit of a milder form than previously experienced and in the context of a far more benign international environment; slugflation may be a more appropriate term.
|Number of pages||8|
|Journal||Quarterly Economic Commentary|
|Publication status||Published - 1 Dec 1989|
- Scottish economics
- recession economics