I wrote yesterday about why we should worry about deflation. One person who should be especially worried about it is George Osborne. Another is Ed Balls. There are good reasons.
First, deflation can cut GDP. No Chancellor wants that.
Second, deflation cuts VAT receipts because prices fall.
And it is likely to cut PAYE receipts too as wages fall.
But in real terms the value of government debt increases as the pound deflates.
Fifth, real interest rates rise.
All of that makes anyone's plans to move towards a balanced budget a lot harder to achieve.
The case for inflating the economy now really is unassailable.
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You are probably right about the dangers of deflation in the short term, especially if we get into a Japanese type economic position. However as the main price decrease is oil and energy prices this can only be temporary – 2 years? The EU is a worry but the German economy is now growing and the dax index going up.
The EU was heading for deflation before oil
And so were many prices here
I am not so sanguine
I think this a problem best thoroughly averted