Macro UK US China profiles Flashcards
1
Q
Economic performance of UK
A
- Recessions in 2008-09 and 2020, impacting on unemployment.
- Rapid increase in inflation during cost-of-living crisis.
- Budgetary impact of the financial crisis, austerity and the pandemic/cost-of living.
- Persistent current account deficit.
- Increase in income inequality since 1970s.
2
Q
Summary of key issues in UK economy
A
Key issues for the UK economy in the past include:
- Deindustrialisation and rise of inequality since 1979.
- Not joining the Euro, following issues of ERM.
- Benefits of globalisation, including the NICE era.
- Impact of external shocks, such as financial crisis, pandemic and Ukraine-Russia.
- Brexit and new trade deals signed.
3
Q
Longer term challenges for UK
A
Longer-term challenges include:
- High levels of national debt
- Future relationship with Europe and further trade deals.
- Productivity puzzle.
- Strains on public services
4
Q
US economic performance
A
- Recession in 2009 and 2020, impacting on unemployment.
- Rapid increase in inflation during cost-of-living crisis.
- Budgetary increases during the financial crisis and pandemic/cost-of-living crisis.
- Persistent current account deficit.
- Rising inequality over time and high relative to similar economies like the UK.
5
Q
Summary of key issues in US
A
- Rise of the US as an economic superpower, including dollar as a reserve currency.
- Benefits of globalisation, including for global US companies.
- Rise in income and wealth inequality.
- External shocks, such as financial crisis, pandemic and Ukraine-Russia.
- Impact of recent presidents, such as Obama, Trump and Biden.
- Trade war with China and renegotiation of NAFTA.
6
Q
Longer term challenges in US
A
- High levels of national debt and ageing population 2. High levels of income and wealth inequality
- Impact of geo-political tensions, including with China.
- Future growth prospects, including productivity issues.
7
Q
Economic performance in China
A
- Rapid economic growth but impacted by pandemic, with much slower growth recently.
- Lower inflation than UK and US, with potential issues of deflation.
- Significant increase in budget deficit since 2008.
- Persistent current account surplus, although lower in recent years.
- Income inequality following Kuznets curve relationship.
8
Q
Key issues in China
A
§ Opening up of Chinese economy, contributing to globalisation.
- Benefits of globalisation, including rapid fall in absolute poverty.
- Growth of low-value manufacturing, recent wage rises and switch to high-value.
- Use of competitive devaluations and subsidies, leading to US-China trade war.
- Joining RCEP trading bloc.
- External shocks, such as pandemic.
9
Q
Longer term challenges in China
A
- Slowdown in growth, including deflation and property market issues.
- Rise of the shadow banking sector.
- Population challenges, such as ageing workforce and reduced labour supply.
- High levels of debt, in the public and private sectors.
10
Q
Examples of protectionism policies between US and China
A
- US imposed tariffs on more than $360 bn of chinese goods
- 15% duty on chinese imports
- China has retaliated with tariffs on more than $110 bn of US products
- tariffs ranging from 5% to 25% pm US goods
11
Q
protectionist policies between UK and china
A
Steel:
- steel imports from china tariffs
12
Q
UK trade examples
A
- China replaced germany as UK’s biggest single import market
- increased by 66% since start of 2018
- trade with EU countries fell by 23.1% first three months of 2021
Australia deal:
- Australia send certain amount of agricultural produce without tariffs, these quotas will increase over time
- means UK goods cheaper to sell to Australia
13
Q
Amazon tax example: Tax avoidance
A
- moved intellectual property into Luxembourg partnership which served as an intermediary between Amazon’s European operations
- as a partnership, the go-between was not subject to tax under luxembourg law
- shifted lots of profit to untaxed entity, by charging operating company substantial royalties for name etc
- allowed Amazon to avoid tax on three-quarters of all profits on its sales in the EU
14
Q
UK inflation rate
bank rate (interest rates)
A
2.6 %
4.75 %
