"Gold Dust" Flashcards by 0a548ck Kan3

Tell me about the prospects of the economy?

We are stagnating
This can be blamed on AD factors decreasing or SS shocks

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What was the potential growth before and after the financial crisis?

2.5% to 1%

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Define potential growth

Potential growth is the rate of growth that the economy can achieve without it being inflationary

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What is our forecasted growth?

0.8

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What is our output gap?
Why?

We have an output gap of -0.1% - this is more because our potential growth is really bad you
However, this isn’t a surprise as unemployment is higher than normal

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What is our GDP per capita?
What is effecting this?

GDP per capital is 36,000 pounds. There has been strong wage growth so this is quite high

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How is our economy split?

Very poorly
79% Services
14% Manufacturing
6% Construction
1% Agriculture

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What type of unemployment is in the economy right now?

Cyclical

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What is the NRU?

3.5%

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What is a disadvantage of unemployment data?

However, all this data comes from dodgy LFSs whilst the ONS tries to move to a more technologically advanced system
(Unemployment could be higher)

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What is the economically inactive rate?
What impact does this have?

22.2%
This means that the labour force is shrinking so this leads to reduced potential growth and leads to higher wage rate

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What is wage growth?

5.6%

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Is the labour market loose or tight?

It is loose

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What is a loose labour market?

Not many jobs available with high unemployment (firms are unwilling to hire people)

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What age groups is youth unemployment?

16-24

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What has been the trend (with numbers) in youth unemployment rate?

11%
Has been decreasing since COVID

Why is consumer confidence weak?
(Abnormal)

Fiscal drag, cost of living, no fault evictions, nearing election, politician misinformation, higher taxes

What and when was the peak of inflation?

11.1% in October 2022

What is the differnce between consumer price index and Core price index?

Core price index has removed food, gas, electricity and fuel

What is PPI?

0.6%

Producer price inflation - this tracks the change in price of a basket of goods as they have been manufacturers (aka factory gate inflation)
It basically tracks the price in input prices

What are inflation expectations?

3.3%

What is the current account deficit?
Why?

3.2%
This is lower than usually (4% average) due to the stagnation

Tell me about productivity?

Awful since BREXIT and 2008

This means that the cost of producing goods is higher and so export competitiveness is down

What is the min wage?
What does this influence

11.44 an hour
One of the highest in the world so export competitiveness is hurt

Is the pound week or strong? What are the implications of this?

Week pound which is good for exporters (because of price) but our manufacturing sector is only 14% of our economy so we don't benefit much and since services are bought because of their quality mainly, not price service exports don't benefit

How are our trading partners doing?

Eurozone economies are stagnating US economy is strong

What is the budget deficit?

4.2 (2023-4)

What is our national debt?

98% of GDP (we are on the edge of it being unsustainable)

Tell me about bond yields?

4.2% They were going up but then went down after Truss but was also been effeected by contractionary fiscal policy eg highest tax band has been lowered and frozen until 2028 (fiscal drag)

What will the policy of freezing tax bands get for the UK?

Fiscal drag so lower consumer confidence 45Bn in revenue

Tell me about NI?

National insurance 12 to 10 to 8 maybe to 6 in next budget

What is the rate of VAT

20%

Tell me about corporation tax

19 to 25%

Tell me about our gini coefficient?

0.357 It has been increasing as we have been lowing the tax bands

What was the BoE base rate before all of the hikes? What is it now?

0.1% 5.25

What could happen if we lower interest rates to fast?

Increasing inflation

What is the averge lending rate? What does this show?

6.25 It higher BoE base rates are being passed on However, there is credit available for firms/people who want it

What is and explain the current savings ratio?

10.5% Higher than normal due to low consumer and firm confidence (Reduces AD as they aren't spending)

Tell me about QE

There has been a lot of QE 450Bn during COVID