UK Economy Stats 2018

Question 1

UK Growth

Answer 1

Annual Growth rate- 1.2%- Low Consumer + Business Confidence- Brexit
2018 Forecast Annual Growth Rate- 1.5%— LR Growth Rate- 1.5%
Real GDP per Capita- £30,000
Total GDP- £2 trillion
GDP Breakdown: Services 79% + Manufacturing- 14%

Question 2

UK Unemployment

Answer 2

Unemployment Rate- 4.2%
NRU- 4.5%
Youth Unemployment- 11.5%
Long Term Unemployment (>1 year)- 1.1%
Wage Growth- 2.8%
Consumer Confidence- VERY WEAK- Brexit Uncertainty + Shock Election
Income Tax Bands: 0%- Up to £11,850, 20%- up to £46,300, 40%- up to £150,000 + 45% above £150,000

Question 3

Inflation

Answer 3

CPI- 2.5%— 2% at end of year
Food Price Inflation- 3%
Oil Prices- 2016- $43/barrel —> 2018- $74/barrel
Core Inflation (Excluding volatile price items)- 2.3%
Producer Price Inflation- 2.4%
Inflation expectations- 2.9%
Wage Growth- 2.8%- Greater than CPI- Real Wage Increases

Question 4

Balance of Payments

Answer 4

Current Account DEFICIT- 4.1% of GDP- large Trade Deficit
Productivity + Investment- Very Poor— Large WEAKNESS
Exchange Rate- £1=$1.37- Recovery
— £1=$1.14- Weak

Eurozone Economy- Strong Recovery- 2.7% 2018 Forecast Growth
US Economy- At Full Employment
— Strong Annual Growth- 2.9%

Question 5

Government Finances

Answer 5

Budget DEFICIT- 2.1% of GDP- £50 Billion
- 0.9% Forecast- Austerity Measures
— £3 Billion set aside for Brexit Shock
National Debt to GDP- 86% of GDP- Forecast 78% by 2021
Bond Yields- 1.4%- Average Yield on 10-year Bond
INCOME TAX Bands
Corporation Tax- 19%- Expected to be cut to 17%
VAT- 20%

Question 6

Income Inequality

Answer 6

Gini Coefficient- 0.34- Decreased due to Austerity
Relative Income Inequality- Above OECD Average of 0.31
— Worse Income Inequality relative to other Countries

Question 7

Interest Rates

Answer 7

Base Rate- 0.5%
Average Lending Rate 1.5%
Average Quoted Mortgage Rate- 1.75% 2-year Fix
Business + Consumer Confidence- WEAK
Mortgage Approvals- Stagnant Flat Growth- Brexit
QE- £435 Billion so far- August 2016- extra £60 Billion
Willingness to Lend to Small/Medium Enterprises- Very Poor until 2016- enterprises still see no improvement

Question 8

Long Term Investment- SSP

Answer 8

£31 Billion- to Improve National Productivity- over next 5 years
Corporation Tax- 19%- plans to cut to 17% by 2020
Encourage LR Investment- Investment Allowance- £200,000
— Subsidies + Tax Relief to Small-Medium Enterprises- for R&D
Skilled Workforce: - Increased Tax-free Allowance- increase to £12,500 by 2020
- 40% income tax Threshold- increase to £50,000
- Apprenticeship Funding- Apprenticeship Levy
- Curriculum Reform
- Subsidies + Grants for Adult Training
- Greater Funding for Promotion of Maths + Computer Science
Transport: -Transforming Cities Fund- funded by Increased Vehicle Excise Duty
— £1.7 Billion to local councils- for Infrastructure 2018/19
- Rail Infrastructure- Crossrail + HS2
Digital Infrastructure: - £1 Billion- £176 million for 5G + £200 million for Full Fibre Networks
Research: 2.4% of GDP to be spent on Research- by 2027

Question 9

Market-based Policies- SSP

Answer 9

Planning Reform- Ease Planning Permission- for New Homes
High Pay, Low Tax, Low Welfare- Universal Credit, Benefits Cap
— Higher NLW- £7.83 for 25+ over
Competitive Markets: - Deregulation- cut £10 Billion of Red Tape
— For every 1 regulation imposed- 3 Removed
— Red Tape Challenge- challenge Businesses to cut as much Red Tape as possible
Trade- Drive for Greater Exports + Trade deals with non-EU countries as well as EU
More Balanced Economy- Northern Powerhouse- More Power + Funding to local councils + Promote Northern Growth- Decrease UK Dependence on London