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Adjusting to the Oil Price Fall
Author(s) -
BUDD ALAN,
BREEDON FRANCIS,
DICKS GEOFFREY
Publication year - 1986
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1986.tb00416.x
Subject(s) - economics , revenue , balance (ability) , fall of man , oil price , weakness , keynesian economics , monetary economics , law , finance , political science , medicine , politics , physical medicine and rehabilitation , anatomy
In his Budget speech last March Mr. Lawson said “If we can survive unscathed the loss of half our North Sea oil revenues in less than 25 weeks, then the prospective loss of the other half over the remainder of the next 25 years should not cause us undue concern.” In this Viewpoint we ask whether Mr. Lawson's optimism was premature. Although we continue to believe that the fall in oil prices will have favourable effects on the UK economy, there will be problems of adjustment which could be painful. We ask the following questions: (a) What adjustment to the balance of payments is needed to compensate for the fall in oil prices? (b) How will the adjustment occur? (c) How far can the recent weakness of sterling be explained by the fall in oil prices, or is there a more alarming explanation?