02级翻译实习作业
作者： 发表日期：2005-11-25 浏览次数：

Oil and the economy: How big a threat?

High oil prices will hurt the British economy, but it will cope better than other major economies

THE Bank of England made no change to interest rates on November 4th. The Bank’s monetary-policy committee has now kept the base rate at 4.75% for three months, confounding expectations in the summer of a hike to 5.0% this month.

Lower growth in the third quarter and signs that the housing market has finally run out of steam are two reasons why the Bank has kept its hand off the interest-rate trigger. But the committee will also have taken into account the oil price, which has leapt by a fifth in the past three months. The price of Brent crude has risen by 60% since the start of the year.

Past oil-price shocks have tipped the British economy into recession, so there are grounds for concern. The two oil-price shocks of the 1970s generated a noxious mix of rampant inflation and recession. Each time, rising fuel bills not only led to an inflationary price-wage spiral but also imposed what was in effect a big tax on oil-users, sending the economy into a tailspin.

But history does not necessarily repeat itself. For one thing, this year’s oil-price shock is less shocking than those of the 1970s, when the oil price first quadrupled in 1973-74 and then trebled between 1978 and 1980. In real terms, the oil price is currently about half the peak it reached in 1980. For another, the economy is less reliant upon oil. It uses about a third less oil per unit of GDP than 20 years ago, according to the National Institute of Economic and Social Research.

As important, the economy is now better able to cope with oil-price shocks than in the past. Wages and prices are no longer subject to the controls imposed in the 1970s. Labour-market reforms have made wages a lot more flexible. And intensifying competition in product markets means that firms find it much more difficult to pass on higher costs by raising prices. The mark-up mentality has faded.

The economy has also been better managed since the government first switched to targeting inflation in 1992 and then made the Bank of England independent in 1997. The Bank’s success in keeping inflation low in the past few years has entrenched expectations of price stability. Despite the oil-price increases, consumer prices rose by just 1.1% in the year to September. With inflation this low, the danger of another upward price-wage spiral seems remote despite recent hikes in consumer fuel bills.

Last but not least, Britain was a net importer of oil in the 1970s. It took time to ramp up production in the North Sea after oil was first discovered there. The trade balance in oil swung into surplus only in the second half of 1980.

Although the big surpluses of the early 1980s have shrunk, Britain remains a net oil exporter. Despite falling production, the offshore oil industry expects Britain to remain self-sufficient in oil over the next three or four years and to meet 80% of Britain’s oil demand in 2010.

Britain’s self-reliance in oil cushions the economy further from the shock of an oil-price rise since there is no longer a transfer of income to overseas oil producers. This means that more of the extra oil revenues can be recycled within Britain rather than through higher demand from oil-exporting countries. The government gets a higher income in taxes on oil production which can finance higher spending. Some of the profits made by the offshore industry will be spent in Britain.

Not only is Britain better placed than in the past to withstand an oil-price shock, but also it is better placed than other economies. Canada is the only other country in the G7 group of big economies to be a net oil exporter. And Britain is also the least oil-intensive of the G7 countries. Manufacturing uses a lot of oil, but this sector is now quite small in Britain. And in a small country, lorries and cars don’t have to flog over the vast distances that they do in North America.

Britain has another bit of luck: it has a relatively big share of oil-producing countries’ import business. According to the National Institute, Britain’s share of this market is 6%—twice its share of world GDP. By contrast, America’s share is 11%—half its share of world GDP. Allowing for the relative size of their economies, Britain has a bigger share of the market than the euro area. As a result, the British economy should benefit disproportionately when the oil producers spend their extra revenues, which is likely to be more swiftly than in the past.

All this means that Britain will take less of a hit in lower GDP growth from the oil-price shock than other major economies. According to Ray Barrell, an economist at the National Institute, a rise in oil prices cuts Britain’s GDP growth about half as much as it cuts the euro area’s and about a third as much as it cuts America’s.

However, Britain will not escape unscathed, not least since it will feel the effects of slower growth in the euro area and America, its prime export markets. According to Ben Broadbent, an economist at Goldman Sachs, the jump in oil prices since last year will reduce GDP growth in 2004 by 0.2 percentage points and in 2005 by 0.3 percentage points.

Yet even taking this reduction into account, Goldman Sachs is forecasting that national output will expand at a healthy rate, by 3.2% this year and by 2.6% next year. The oil-price rise may be restraining the economy, but unless further increases take place, the damage is likely to be surprisingly limited.

(From The Economist, Nov 4th 2004)

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