2023 UK MACRO MAIN STATS Flashcards
annual growth rate
4% in 2022, strong recovery following huge contraction during pandemic in 2020
annual growth forecast 2023
0.6%, very low, down from 2022
due to cost push inflation, oil, electricity and food prices
low producer and consumer confidence affecting investment and consumption, contractionary fiscal and monetary policy
output gap (actual gdp as percentage of potential gdp)
-1.6% (Q3 2023), changed from a positive output gap in previous years due to easing supply side conditions and waning demand
GDP per capita
£47,000
Total GDP
£2.3 trillion
79% services
14% manufacturing
6% construction
1% agriculture
unbalanced growth due to service-domination
unemployment
4% in Q3 - low, signals resilient labour market
however, has risen during the year due to increasing negative output gap
employment
75%, high but slight decrease during the year
economic inactivity rate
21%
has risen during covid, mainly driven by people in their 50s and 60s who have not returned to work
supply side policies have been employed to try to bring them back
youth unemployment rate
10% - low and down from 14% during pandemic due to strong services rebound and targeted policies
long term unemployment rate
1%, very low and healthy
wage growth
7%, strong due to a tight labour market, e.g. UK trade unions have been strong and demanding higher pay; even in private sector
higher than inflation so real wage is positive but much lower, around 2.7%
consumer confidence
very low
negative real wages, high inflation, low growth forecast, rising unemployment forecast
has been slight increase during the year but overall still not optimistic
job vacancies
have been falling since UK reached record high figure in 2022, but still very high.
indicates tight labour market is loosening (labour shortages are falling)
with negative forecast growth and low business confidence, employers are less willing to hire workers so vacancies are falling
inflation (CPI)
6.7% in Q3 - way beyond target rate of 2% but forecast to fall to about 5%
driven by supply side factors - oil, fuel, electricity, food, strong wage growth and weak pound
is also rising in main trading partners, but is much higher than them
core inflation (underlying inflation)
5.7% Q3 - higher than target but since CPI is higher, shows that food and energy are the drivers of inflation
CPI but excluding food and energy which are very price volatile
producer price inflation
measures wholesale price inflation
negative since June 2023, is lower than CPI for first time in 2 years, meaning CPI is expected to fall
inflation expectations
what households think inflation will be over next 12 months
around 4%
this drives wage growth
it is lower than 7% wage growth rate, which means wages will rise more slowly, even though wage growth is above target
food price inflation
19% - disproportionate impact on lower income households
current account deficit (% of GDP)
approx 4% Q2 - high persistent CA deficit driven by high labour costs and low labour productivity
productivity and investment
20% below the average rate of other G7 countries and is 25% below pre-financial crisis rate
directly reduces export competitiveness and drives CA deficit
exchange rate
weak relative to major trading partners like US and Eurozone
£1 = $1.28
£1 = 1.16 euro
although has potential to increase X competitiveness, UK is a net importer of necessities like raw materials, semi-finished goods and capital goods - unavoidable
this is driving cost push inflation and worsening CA position
minimum wage
£10.42 / hour, higher than inflation which is what is increasing unit costs and lowering competitiveness
growth of major trading partners, US and Eurozone
both forecast to experience slower economic growth, bad news for UK exporters
budget deficit
9.5% of GDP in Q3, has been increasing since 2021-2022 fiscal year, is due to the fiscal support to economy during and after the pandemic, and the decrease in indirect and direct tax revenue during recession
