Deflation: Good, Bad, and Turning Ugly

For those of us who spent our formative years in the inflationary 1970s and 1980s, this is an unfamiliar, even alien world. Back then, the big economic challenge was double-digit inflation, which Britain in particular seemed perennially prone to. Interest rates were repeatedly raised and lowered to cope, entrenching a pattern of economic boom and bust that was devastating for industry. It was not until the Great Moderation of the Nineties and early Noughties that the UK was able to kick the habit.

Today the threat is very different and, many would argue, very much more serious – that of stubbornly persistent economic stagnation and price deflation.

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