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Economics UK Economy An Analysis Of The Essay

Economics UK Economy

An analysis of the latest figures for key economic indicators and the factors which have affected these indicators. This should include the figures for unemployment, inflation and economic growth.

Unemployment

The unemployment rate is a very important indicator of the overall health of the economy. Currently the unemployment rate is at 7.8% (Office for National Statistics, 2012). However, this figure does not affect the population equally. Different segments of the population have different employment rates. Furthermore, the unemployment rate does not include people that are not actively seeking employment. In the chart these people are considered to be "inactive." Another interesting item listed in the report is that the unemployment rate for the youth demographic was falling due to a record number of 16 to 24-year-olds being enrolled in some type of educational program.

Employment in the UK has suffered from recession. In 2008 there was a global recession in the United States that spread throughout the world and the UK was not immune. The global economy is highly intertwined and when on area of the world is experiencing economic difficulties this can have effects for the rest of the world. However, since the recession, the UK has made slow but steady progress in lowering the unemployment rate. Much of this has been through fiscal stimulus.

Figure 1 - Employment Breakdown (Office for National Statistics, 2012)

Inflation

The UK uses a consumer price index (CPI) as a measure of consumer price inflation....

The CPI is based upon a basket of goods and services that people usually purchase. The basket is full of all kinds of different items that people generally consumer on a regular basis such as food, housing, and utility services. In December of 2012 the CPI was measured at 2.7% which was the same rate that the country experienced three months in a row. However, the prices for the items in the basket did not all stay the same; the just offset each other. For example, the price of gas and electricity bills rose while the price for airline travel rose at a much slower rate (Office for National Statistics, 2013).
Figure 2 - Consumer Price Indices December 2012 (Office for National Statistics, 2013)

A 2.7% inflation rate is fairly low. If the government choses some kind of monetary stimulus to help economic growth then this rate could rise substantially such as in 2010 and 2011. However, the government representatives must try to balance price inflation with other objectives. If the Bank of England injects cash into the economy by purchasing government bonds then the increase of cash in circulation often raises prices and this will be reflected in the CPI. People will have money to pay for goods and as a result prices generally rise through the laws of supply and demand. If there is more money in the supply then the demand will rise and suppliers will adjust their prices accordingly.

Economic Growth

The UK economic growth index, index of production, shows some pretty negative figures relative to growth. For example, production fell by a seasonally adjusted basis by…

Sources used in this document:
Works Cited

Financial Times, 2013. Question 3: Fiscal Policy. [Online]

Available at: http://www.ft.com/cms/s/0/1115c770-545a-11e2-9d25-00144feab49a.html#axzz2IAShLpER

[Accessed 1 January 2013].

Kirka, D., 2011. UK recession fears grow as manufacturing drops. [Online]
Available at: http://www.usnews.com/news/business/articles/2013/01/11/uk-manufacturing-output-contracts [Accessed 11 January 2013].
Available at: http://www.ons.gov.uk/ons/dcp171778_294912.pdf
Available at: http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/december-2012/statistical-bulletin.html
Available at: http://www.ons.gov.uk/ons/dcp171778_294429.pdf
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