evaluation Flashcards
(10 cards)
main challenges 2025 UK economy
-estimated growth Is declining
- discal inheritance for gov is poor, rising high national debt, persistently high borrowing, 70 year high for tax burden
- concequences cost of living crisis being felt
- consumer prices 30% higher than in 2015
BOe cautious cutting IR
high corporate and household debt
- low capital investmen, huge productivity gap eirh us and germany, increasing economic inactivity and working poverty
trade fractions since leaving EU
fiscal policy - issues economy
large budget deficit 137bn 2024, little room for flexibility in future to boost growth
debt tio GDP ratio is near 100%
fiscal drag
high national debt ruining credit rating
controbersal decision raise NI to 15%
proposed welfare reforms aimed cutting spending £5-6bn
pressure reduce NHS waiting lists
taxes
income tax revenues 329 billion
then VAT 214 bullion
then NI contributions 199
gov spending
social protection 379 billion
health 277
education 146
debt interest 126
how can the UK gov cut national debt
- grow economy to increase tax rev
- allow slightly higher inflation reduce real value of debt
- deep cuts in gov spending
wrlfare reforms- raising state pension age, tightening eligibility claim welfare, reduce eco inactivity
- freeze income tax allowances - create fiscal drag
increase in taxes such as national insurance
monetary policy- arguments for and against cutting rates
demand pull inflation
housing bubbles, mortgages cheaper
depreciates £ WPIDEC
liquidity trap argument
due to cost of living crises low consumer confidence and worries of increasing taxes lowering IR may not stimulate AD
supply side
relative productivity UK is 4th g7, use and germany ahead
investment as a share of GDP = 17%below G7 average
r+d spending 2.9% GDO above EU average
CA deficit 3.3% GDP 2023
89bn
eco inactivity = 22% 9.35 million
new housebuilding in uk 233k
current SSPS
- airport expansion at Heathrow
- lifelong learning entitlement
-contract for difference to incentivise renewable energy markets to improve sustainability in supply side \
- 50 bilion invested into engineering apprenticeships
- subsidies STEM teachers improve education for students
- 30 hours childcare pay
housing and planning reforms, target of constructing 1.5 million new homes end of 2029
investment - full expensing, businesses can deduct full cost of investment in equipment from tax bill, new investment zones REZ
West Midlands and greater Manchester offering tax relief for inward investment
infrastructure, HS2 extension custom
A £4.5 billion fund targets key sectors such as green energy, aerospace, life sciences, and zero-emission vehicles.
£500 million allocated over two years to establish AI innovation centres.
Impact: Supports the development and adoption of AI technologies, enhancing the UK’s position in the global tech landscape.
growth potential from ai
increased producutbity, workers can focus on higher value activities
expanding high skilled employment
creates demand for skilled workers , AI developers, data scientists
boosting regional development
AI growth zones attract investment, kpb creation
enhancing global competitvmess, being a leader in ai development can allow FDI, promote exports AI tech
in 2035
economy may be 6% smaller if Brexit never happened
