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Question

regions high share manufacturing employment yorkshire north east suoth east

Answer 1

fell 2019 fell around 20.5% 2025, 1% increase

Answer 2

mental health long term employment hysteresis long term sickness post pandemic tax disincentives- poverty trap Long-Term Sickness and Disability (Rising Trend): Factors include: Mental health conditions (especially among younger adults); long-term conditions like long Covid + an ageing population with rising chronic illness. Impact: Reduces labour supply and increases NHS and state welfare burdens. Caring Responsibilities (Mostly Women): Many people are not working due to unpaid care work including caring for elderly or disabled family members. High childcare costs and limited social care access intensify this issue. Impact: Gender imbalance in economic activity and lost potential output.

Answer 3

- deindusataisation - low productivity uk uncompetitive compared to other G7 - specialised in services so needs to import manufacturing goods, high cost of labour less competitive -Strong Consumer Demand for Imports: UK has a high marginal propensity to import (MPM), especially among higher-income households. Consumers spend heavily on electronics, cars, food, and clothing, much of which is imported. Under-Investment: Chronic underinvestment in transport, ports, digital networks, and technical education weakens competitiveness. This affects supply chain efficiency, delivery reliability, and production costs. Low investment limits productive capacity.

Answer 4

NIC increases by 1.2% to 15% from aril 2025 and threshold decreases at which NIC becomes payable to 5,000 from 9,100 impact:Slackening in Labour Demand: The variable cost of hiring workers will increase, particularly affecting businesses with many lower-wage employees. This could discourage hiring, particularly in labour-intensive sectors such as retail and hospitality. Potential for Wage Stagnation: Rising employment costs without a corresponding increase in productivity could lead to wage stagnation as businesses limit wage growth to manage higher NIC obligations. Sectors with low-profit margins such as hospitality, are likely to feel the changes more acutely. Lower profits will hit corporation tax revenues.

Answer 5

Capital investment tax allowances Creation of the British Business Bank Lower corporation tax rate for smaller businesses Grants and loans for green and sustainable technologies.

Answer 6

Unfreezing of income tax allowances (£12,570 pa) Increase in national minimum wage (rising to £12.21 per hour) Real terms increase in value of welfare benefits such as Universal Credit

Answer 7

Higher wages increase disposable income for low-income workers, who generally have a higher marginal propensity to consume. This is likely to result in increased consumer spending on goods and services. However, if the wage increase leads to job losses or reduced working hours in some sectors, the rise in consumption could be dampened. Higher wages could reduce reliance on means-tested welfare benefits such as Universal Credit, potentially lowering government spending in this area. However, hundreds of thousands of public sector workers are paid at or around the minimum wage – leading to rise in government spending on pay in areas such as the NHS.

Answer 8

A higher minimum wage raises the cost of labour for businesses, particularly in labour-intensive industries such as retail, hospitality, and agriculture. This increase in production costs can shift the SRAS curve leftward as firms produce less at a given price level. The wage increase could incentivize businesses to find ways to improve productivity, such as through better technology, labour training, or optimizing workflows. This might offset some of the initial cost pressures and mitigate the reduction in SRAS. Other costs might also fall – for example, a drop in international energy prices.

Answer 9

1.7% per year

Answer 10

Market deregulation such as liberalisation of telecoms, postal services and the UK energy industry. The aim is to attract new entrants, enhance contestability, increase investment and drive improvements in productivity / efficiency. (Note: Deregulation is not the same as privatisation.) Selling State-Owned Enterprises (SOEs): Transferring ownership of industries (e.g., energy, telecommunications, transportation) from the public to the private sector encourages efficiency, innovation, and better resource allocation. UK privatisations in recent years?

Answer 11

Infrastructure Projects: Building or upgrading roads, railways, airports, and ports reduces transportation costs and improves efficiency for businesses. Investing in renewable energy and modernizing power grids ensures sustainable energy supply, State Subsidies: State-funded help for nursery and early-years education, investment in affordable housing, renewables, funding for apprenticeships and financial support for students from low-income families.

Answer 12

stimulating consumer spending and investment lower interest rates, which is the cost of borrowing for household and businesses encouraging consumers to spend more. Businesses are more likely to invest in expansion, equipment and innovation due due to cheaper loan financing. This increase in spending an investment boost aggravate demand. Weakan exchange rate and exports. Investors tend to seek higher returns to the UK interest rates may lead them to move financial capital, hot money to countries with relatively high interest rates weakening demand for Stirling. This might improve the competitiveness of exports.

Answer 13

Low consumer confidence and business confidence, during times of academic uncertainty households and firms may be more inclined to save and reduce existing debt rather than borrow money and spend even if loans become cheaper. Also many people are on fixed mortgage rates. If banks are concerned about the borrowers ability to repay loans or if the financial sector is facing liquidity issues lower interest rates might not translate into greater credit availability restricting the impact Depend depends on the elasticity of demand for imports and exports Depends on marginal propensity to import instead of consume Depends if consumers choose to save for example during a liquid liquidity trap when there's low confidence If in a liquidity trap, then lowering interest rates won't have an effect

Answer 14

Time for borrowing costs to affect consumer and business behaviour. When central banks raise interest rates many people and companies have existing loans, mortgages or credit agreements that were established at lower interest rates these loans have fixed rates which means the cost of boring doesn't increase immediately. Sticky wages, many prices in the economy particularly wages and long-term contracts is sticky meaning that they don't change quickly in response to shifts in monetary policy for example, wages are often determined through annual contracts

Answer 15

currency risk/ devaluation risk - fluctuations in ER can deter investors threat of seizure of private assets by governemt

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