STATS

Question 1

Annual growth rate 2021

Answer 1

7.4%, looks high but rising from a low base as growth fell by 10% in 2020

Question 2

Annual growth forecasts

Answer 2

3. 8% in 2022 due to cost push inflation, could be recession by end of year
4. 8% 2023

Question 3

output gap

Answer 3

+0.7%,
positive output gap due to strong growth and how unemployment is below natural rate, there’s demand pull inflation (characteristic of positive output gap)

Question 4

Total GDP

Answer 4

$2.4 trillion
unbalanced: 
79% is from service sector (makes shocks greater)
14% is manufacturing 
6% construction
1% agriculture

Question 5

Unemployment rate

Answer 5

3.8%
lower than UK’s 4% natural rate
highest it got to in covid was 5.4%
due to furlough scheme and wage subsidies

Question 6

employment rate

Answer 6

75.5%

pre covid was 80%

Question 7

economic inactivity rate

those not willing/unable/not looking to work

Answer 7

21.4%

more people aren’t willing to work after covid

Question 8

youth unemployment

Answer 8

risen after recession

now 11.1%

Question 9

long term unemployment (unemployed for over a year)

Answer 9

1%

Question 10

wage growth

Answer 10

5.4%

real wage growth is negative, not keeping up with inflation and cost of living

Question 11

job vacancies/consumer confidence

Answer 11

high job vacancies, shortages of labour hence why the high wage growth

consumer confidence was high/rising with huge spending, in 2021, 90% of GDP was consumption but falling recently with inflation

Question 12

CPI inflation rate

Answer 12

7% (forecast peak of 8.4%)
demand-pull, expansionary monetary policy, increases in raw materials, gas prices, timber prices high, food prices, wages, QE

Question 13

core inflation (inflation rate without volatile items like oil and food)

Answer 13

5.7%

shows general inflation

Question 14

producer price inflation (looks at change in price of a basket of goods as they leave factory, wholesale inflation, looks at price of goods as they are manufactured)

Answer 14

11.9%
this means input costs for firms are rising, COP rising e.g. raw materials, wages
as its high, we expect it to feed through to CPI inflation
its a good future indicator of cpi inflation

Question 15

food price inflation

Answer 15

5.9%

Question 16

current account deficit

Answer 16

3.7% of GDP
due to supply side issues e.g. lack of competitiveness

POOR productivity and investment

Question 17

productivity and investment

Answer 17

POOR
UK productivity is 20% less than G7
means COP is high, so less competitive exports

business investment poor ever since brexit due to uncertainty and contractionary monetary policy

Question 18

min wage

Answer 18

$9.50 an hour

Question 19

budget deficit

Answer 19

5.6% of GDP (2021-2022)

was only 2% of GDP before covid

Question 20

national debt

Answer 20

96% of GDP

will burden future with higher taxes

Question 21

income tax bands

Answer 21

progressive
0% up to $12,570,
20% up to $50,270
40% up to $150,000, anything greater is 45%

these bands have been frozen till April 2026
acts as a sig tax rise, as incomes rise in line with inflation, people are dragged into higher tax bands
this is known as fiscal drag
this forecasts by 2025 the govt will earn more than 8bn more in income tax rev

Question 22

national insurance

Answer 22

risen by 1.25%

Question 23

corporation tax

Answer 23

19% to rise to 25% in 2023 for firms earning higher rate

Question 24

Gini Coefficient

Answer 24

0.363

Question 25

BOE base rate

Answer 25

0.75%, higher to fight inflation

unlikely to work as current inflation is more cost push

Question 26

Confidence

Answer 26

banks willingness to end is good
consumer confidence is high but falling sharply
business confidence high but now falling
saving ratio - 6.5%

Question 27

QE

Answer 27

total $895bn for UK

$450bn 2021 25% GDP, half QE total