MEDC: UK Flashcards
(12 cards)
State and explain the economic growth rates for 2024 and 2025 (projected).
2024: economic growth averaged 1.5%, which is below the 2% target
2025: (From most recent Bank of England forecast) 0.5% as the UK edges closer to recession
State and explain the unemployment and youth unemployment rates in the UK.
Unemployment: UK unemployment has been steady for many years but has started to rise. It is at 4.4% currently. however this is expected to rise sharply in the summer as national national insurance contributions will rise. That will also be a rise in the minimum wage
Youth unemployment: on the rise but currently at 15%
State and explain the proportion of the UK who are economically inactive.
21% of the UK population aged 16 to 64 years of age are economically inactive. This has risen in the past three years partly due to the Covid pandemic and the impact on long Covid on those aged 50 and above who then cannot work for a very long time
State and explain the inflation rates in the UK (CPI)
The inflation rate is 3% currently. It peaked at 11% in October 2022 hence we have experienced disinflation but we have stabilised at above the target rate of 2%.
State the average wage growth in the uk currently and how it impacts levels of disposable income.
minimum wage is currently £11.44 for those aged 21 and above, this is set to rise to £12.21 in April 2025. Average wages are growing by 6.5%. This is a quicker rate than inflation which could result in an increase in disposable income. However the tax burden has risen. This is because income tax allowances have been frozen at £12570, alongside this national insurance contributions have risen AND respective councils have increased council tax rates. This may reduce disposable income.
The tax burden is at around 40% of GDP in 2025 but it is forecast to rise to 42% of GDP by 2028. This forecasted tax burden is the highest it has been in 70 years.
State and explain the interest rate (set by the bank of England) in the UK currently.
The basic the base interest rate as of March 2025 was 4.5%. The bank of England has been cutting interest rates although it has had limited effect on lowering inflation rates.
State and explain the current account deficit of the balance of payments in 2024 in the UK.
The current account deficit in 2024 was 2.5% of GDP
The trade deficit was £28 billion. There was a record high deficit in trade of goods however the balance of trade in services had grown.
State and explain the budget (fiscal) deficit in 2024 in the UK.
Do the same for National Debt.
The budget deficit was 4.5% of GDP (131 billion £)
National debt was 100% of GDP. This is the total value of the national income in the UK. The COVID-19 pandemic led to significant increases in government spending. The UK government implemented large-scale fiscal support packages to mitigate the economic impact, including the Coronavirus Job Retention Scheme (CJRS), which cost approximately £70 billion. According to the UK Office for Budget Responsibility (OBR), public sector net borrowing in 2020-21 (the fiscal year impacted by COVID) reached £355 billion, around 15% of GDP — the highest level since World War II.
National debt: This is worrying because the yield on 10 year government bonds which is essentially the interest rate that the government pays on their debt has risen to 4.6% .
State and explain productivity (GDP per hour) in the UK in 2023
In the UK $79. Productivity growth in the UK has halved since the 2008 financial crisis. The UK has a productivity gap and if we compare the productivity of the UK to other G7 economies:
in the USA $97
In Germany $94
(US dollars)
Describe export patterns for the UK (2023 for goods) (2019 for services)
goods: totalling $429B
- 17.8% machinery, mechanical appliances + parts
- 11.3% cars, tractors, trucks, + parts thereof
- 13.9% to USA
- 49.0% within Europe ( 16.5% to Germany)
services: $314B
- 40.8% for business, professional, + technical services
- 19.9% financial services
What are some structural economic weaknesses the UK faces?
- trade deficit: In 2024, the UK faced a £28 billion trade deficit. Despite a surplus in services trade of £176 billion, the substantial £204 billion deficit in goods trade exacerbated the overall deficit. The EU remained the UK’s primary trade partner, accounting for 52% of imports and 41% of exports.
- Fiscal deficit: In the 2023-24 fiscal year, UK debt interest payments are expected to be £85 billion (approximately 3.3% of GDP). For context, in 2010, debt interest payments were around £35 billion, meaning that interest payments have nearly doubled in the past decade.
- Lack of competition in markets: Six suppliers - SSE, Scottish Power, Centrica, RWE npower, E.ON and EDF Energy - control 96 percent of the UK electricity generation market. Comparing the April 2025 Ofgem Energy Price Cap to the April 2024 cap of £1,690, there’s a 9% (£159) annual increase. This is reflective of the rise in energy prices.
- Inequality: High housing costs are exacerbating income inequality and poverty for low- to middle-income families in the UK, leaving them 39% poorer than their Dutch counterparts and £2,300 worse off than similar households in Germany. Despite food being 12% cheaper than the OECD average, housing costs in Britain are 44% higher, consuming nearly a quarter of lower-income families’ budgets. Rising property prices, up over 25% in five years, and escalating rents—up 9.1% in the year to November 2024—worsen affordability. Economists argue that building more affordable homes and enhancing rental support are critical to addressing this crisis.
What is the uk minimum wage
£11.44
In April 2025 it is set to rise to £12.21
