Economy Stats UK

Question 1

Annual Growth Rate
Last two Quarters
Growth Forecasts
Output Gap

Answer 1

Annual of 1.1% in 2024. Quarterly growth of 0% in Q3 and 0.1% in Q4. Bank of England forecasts growth to be 0.75%. Current output gap of -0.6%

Question 2

Industry percentages of GDP

Answer 2

79% in services sector, 14% in manufacturing, 6% in construction, 1% in agriculture

Question 3

Employment Rate
Unemployment Rate
Economic Inactivity
Youth unemployment
Wage Growth

Answer 3

employment rate of 75.1% of total economy, lower than pre-covid 80%, unemployment rate of 4.4% above natural rate due to cyclical unemployment, inactivity of 21.4%, youth unemployment of 13.3%, wage growth of 5.9%

Question 4

Inflation Rate
Core Inflation Rate
Inflation Expectations

Answer 4

IR- 2.6%, lowest since Oct 22 at 11%
CIR- 3.4%, inflation with price volatile items so can reflect true inflation
IE- 3.9%

Question 5

Current Account Position

Answer 5

Deficit which is 2.6% of GDP, persistent due to extremely poor productivity and investments which keep costs of production and export prices high reducing export competitiveness

Question 6

Exchange Rate

Answer 6

Weakening, but UK lack a major manufacturing base so it may not improve current account position as UK tend to export non-price sensitive services

Question 7

Budget Position and National Debt

Answer 7

Budget deficit of 4.8% of GDP which pre-covid was around 2% but was 15% in 2020
National debt is 95.5% of GDP which was 80% pre-covid

Question 8

Income Tax Bands
Corporation Tax
Gini coefficient

Answer 8

Tax bands are frozen until April 2028 which can cause significant fiscal drag, higher gov rev
Reduction in workers NIC can cause cost-push inflation, Corp Tax of 25%, high tax burden since 1940s
Gini coefficient of 0.357, risen slightly

Question 9

Bank Base Rate and Average Lending Rate

Answer 9

Bank Rate of 4.25% was cut from 4.5% to cut UK stagnation, inflation has become a less important policy in UK with focus o boosting GDP especially with Trump tariffs.
Avg lending rate of close to bank rate but as consumer/business confidence is low, expansionary monetary policies have limited affects on boosting AD

Question 10

Savings Ratio and QE

Answer 10

Savings ratio of 12%, pre covid was around 5% so poor consumer confidence, reduces AD
QE has generated £895bn, in covid £450bn pumped into economy causing high inflation in 2022 (11%)