1C - The UK Economy Flashcards
Which industries were nationalised in the UK after WWII?
The coal industry, railways, steel, and electricity industries.
What was the main focus of the Welfare State established after WWII in the UK?
To protect citizens “from the cradle to the grave,” providing social security for all.
What major economic shift occurred in the UK during the 1980s?
A move toward free market policies and privatization of nationalized industries.
What was the largest component of UK government spending in 2022/23?
Social Protection (29.9%), which includes unemployment benefits, pensions, and other social welfare programs.
What are some controversies surrounding the UK’s shift to a market-based economy?
Issues include regulating privatised industries, labour vulnerability, directors pay, tax avoidance, and immigration impacts.
Why is the ageing population a significant issue for the UK economy?
It will lead to increased spending on pensions, healthcare, and social care, potentially requiring higher retirement ages and policy changes.
What is one major issue related to multinational companies and the UK tax system?
The use of tax havens and tax avoidance schemes to reduce tax payments in the UK.
How did Brexit affect the UK economy?
It led to increased costs for goods imported from the EU and contributed to inflation, along with uncertainty about trade and regulatory changes.
What was the UK government’s response to the economic impact of the pandemic?
The government introduced a furlough scheme, paying 80% of workers’ wages, which cost at least £70 billion, and provided loans and grants to businesses.
What was the impact of the furlough scheme?
It helped avoid mass unemployment and business closures but significantly increased government debt.
How did the conflict in Ukraine affect UK energy prices?
The average UK energy bill rose to £3,549 in 2022, triggering a cost-of-living crisis for households and firms.
What were the combined effects of Brexit, the pandemic, and the Ukraine conflict on the UK economy?
These events led to higher inflation, a cost-of-living crisis, and a significant increase in government debt due to economic support measures.
What does GDP stand for and what does it measure?
Gross Domestic Product - measures the total value of all the goods and services produced in a country over a certain period of time. It helps to understand how big or small an economy is.
This of it like a business turnover.
Why is economic growth important?
Economic growth shows how much a country’s economy is expanding. It means more jobs, higher incomes, and a better standard of living for people.
What is inflation and why does it matter?
Inflation is the rate at which prices for goods and services rise over time. If inflation is too high, money doesn’t go as far, making things more expensive for everyone.
How do interest rates affect people and the economy?
Interest rates are set by the central bank to control inflation. Higher interest rates make borrowing money more expensive but help lower inflation. Lower interest rates make borrowing cheaper but can increase inflation.
What does unemployment represent in an economy?
Unemployment measures how many people who are able to work can’t find jobs. High unemployment can mean the economy isn’t doing well, while low unemployment usually indicates a healthy economy.
What is the trade deficit, and why does it happen?
A trade deficit occurs when a country imports more goods than it exports. This means it is buying more from other countries than it is selling, which can lead to economic imbalances.
What is the role of government expenditure in an economy?
Government expenditure is the money the government spends on things like healthcare, education, and infrastructure. It plays a key role in supporting the economy, especially during tough times like recessions.
Why do budget deficits and government debt matter?
A budget deficit happens when a government spends more than it earns in taxes. Over time, this adds to the government’s debt, which can affect how much it can spend in the future and may require tax increases or spending cuts.
How does international trade affect a country’s economy?
International trade allows countries to buy and sell goods and services with each other. It helps countries get products they can’t make themselves and sell things they are good at producing, boosting economic growth.
What is a budget deficit?
A budget deficit happens when the government spends more money than it collects in taxes, causing it to borrow money to cover the gap.
What is austerity?
Austerity is when the government cuts its spending and raises taxes to reduce its budget deficit and national debt.
How did the government respond to the credit crisis of 2007-09?
The government had to cut spending and raise taxes to reduce the large budget deficit that resulted from the financial crisis.
