Supply Side Policies Flashcards
Main Uk supply side weaknesses
Low r / d spending - 1.74% of GDP
Low investment - business investment fell to just 10% of gdp in 2020
Skills shortages- 1.3 m Jon vacancies 2024
Economic inactivity
Low labour mobility - structural barriers to social mobility
Ageing imfastructure
Regional economic imbalances
Productivity gap
Trend growth
Trend growth is the long term non- inflationary increase in GDP caused by an increase in a country’s productive capacity. The trend rate of economic growth is the average sustainable rate of economic growth over time.
Reasons for slow long-run economic growth
Persistent productivity gap
Investment gap
Trade weaknesses
Examples of recent uk supply side policies
Privatisation - Royal Mail 2016
Deregulation of uk retail energy market
Creation of new 8 free ports and regional enterprise zones
Tax free childcare
Creating 20 institutes of technolog, new t levels, new national skills fund
Unemployment
Reforms to the uk immigration system
Relaxation of planning for renewables
Major infastructure projects
Market - based supply-side policies
Tax cuts
Cutting red tape
Privatisation and liberalisation
Free trade and capital mobility across borders
Falexible labour markets
Deregulation of markets
Supply side policies to improve incentives (also free market approach as well as privatisation)
Tax cuts
Deregulation
Trade liberalisation
Intellectual property protection- patents
Supply side policies to improve competition
Competition policy
Deregulation
Market access
Open data and interoperability standards
Supply side policies to reform labour markets
Labour market deregulation
Reducing trade union power
Immigration reforms
Gender and diversity inclusion
What sectors does migration and labour supply
Agriculture
Hospitality and tourism
Health and social care
Construction
Transport
Often low mrp lots of hours hard work
Criticisms of market-based supply-side policies
Income inequality
Reduced social safety net
Market faliures
Underinvestment in public goods
Financial instability
Interventionist supply-side policies
Interventions to reduce poverty
Provision of key public and merit goods
Funding for early stage - research
State ownership of key businesses
Policies to tackle labour market faliure
Building more social housing
Examples of interventionist supply-side policies
State investment in key public services and infrastructure
Min wage
Higher taxes on wealthier
Regional policies
Nationalisation
Selective import controls to promote domestic industries
Why may increase in governmental bond yields affect activity in the stock market
Higher return on bonds - often offer better returns
Less risky
Higher bonds often relate to higher interest rates making future projects for firms harder and devaluation stocks
