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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
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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

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