One way a recession can benefit the economy
22 August 2022
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In the Media
Professor Len Shackleton quoted in the Daily Mail
22 August 2022
Energy and Environment
Healthcare
4 July 2024
Christopher Snowdon writes for The Times
Christopher Snowdon, IEA Head of Lifestyle Economics, has written for The Times on one potential upside of a recession: ‘creative destruction’.
He notes that for years low interest rates have kept weak or ‘zombie’ businesses alive.
“Put simply, a zombie company is a business that cannot afford to repay its debts. When the government introduced the furlough scheme in 2020, there were concerns that it would prop up firms on the brink of bankruptcy. And so it did.
“If interest rates had been at normal levels, many of them would have been put out of their misery and their resources, including their staff, would have been put to better use.
“Our addiction to debt and low interest rates has done us nothing but harm, but we keep taking the hair of the dog because we cannot stand the thought of detoxification.“
Read the full article here.
He notes that for years low interest rates have kept weak or ‘zombie’ businesses alive.
“Put simply, a zombie company is a business that cannot afford to repay its debts. When the government introduced the furlough scheme in 2020, there were concerns that it would prop up firms on the brink of bankruptcy. And so it did.
“If interest rates had been at normal levels, many of them would have been put out of their misery and their resources, including their staff, would have been put to better use.
“Our addiction to debt and low interest rates has done us nothing but harm, but we keep taking the hair of the dog because we cannot stand the thought of detoxification.“
Read the full article here.
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