Uk Macroeconomic Knowledge

Question 1

What was the UK’s trade deficit in 2024?

Answer 1

£32bn

Question 2

Has the UK had a trade deficit or surplus since 1988?

Answer 2

Deficit every year since 1988

Question 3

What causes structural unemployment in the North of England?

Answer 3

Deindustrialisation

Question 4

What was UK inflation in Jan 2023 and Feb 2025?

Answer 4

10.1% (Jan 2023), 2.8% (Feb 2025)

Question 5

What is the UK inflation target?

Answer 5

2%

Question 6

How can green energy affect inflation?

Answer 6

↑ Energy supply → ↓ costs → ↓ inflation

Question 7

What was UK economic growth in 2024 and Q4 2024?

Answer 7

1.1% (annual), 0.1% (Q4)

Question 8

What were the main causes of low UK growth recently?

Answer 8

Cost of Living crisis

Question 9

What was UK unemployment in 2023 and June 2024?

Answer 9

3.7% (2023), 4.3% (June 2024)

Question 10

Why is unemployment rising in the UK?

Answer 10

Slow growth and high interest rates

Question 11

What are the average wages in the North and South of the UK?

Answer 11

North: £31,772 | South: £36,478

Question 12

What has caused regional income inequality in the UK?

Answer 12

Deindustrialisation and Southward migration

Question 13

How much is the UK subsidising offshore wind (2019–2030)?

Answer 13

£557m

Question 14

What is the current UK interest rate (April 2025)?

Answer 14

4.5%

Question 15

What monetary policy was used in 2025 to stimulate growth?

Answer 15

Interest rate cut to 4.5% in April 2025 (from 4.75% at end of 2024)

Question 16

Why was the interest rate cut in 2025?

Answer 16

To boost AD → higher growth, more investment/spending → job creation

Question 17

Was Quantitative Easing (QE) used between 2023–2025?

Answer 17

No QE was used

Question 18

What tax policy was introduced in the Autumn Budget of 2024?

Answer 18

Capital Gains Tax increased

Lower rate: 10% → 18%
Higher rate: 20% → 24%

Question 19

Why was Capital Gains Tax increased in 2024?

Answer 19

Raise gov revenue → fund NHS (£22.6bn extra) → reduce waiting lists → improve employment

Question 20

What was the purpose of the £1bn spent on the Household Support Fund (HSF) in 2023?

Answer 20

Support low-income households → increase AD via spending

However downside = May lead to unemployment trap → disincentive to work

Question 21

What market-based policy did the CMA implement?

Answer 21

Deregulation – reduced reporting requirements → less red tape → boost firm efficiency

Question 22

How was labour market flexibility encouraged?

Answer 22

Reduced union power + eased hiring/firing rules → internal, external, real wage, geographical, functional flexibility

Question 23

How much was expected to be spent on HS2 before it was scaled back?

Answer 23

~£110 billion

Question 24

Why was HS2 scaled back in October 2023?

Answer 24

High cost → debt → opportunity cost of not investing elsewhere

Question 25

How much was spent on Offshore Wind Sector Deal by 2025?

Answer 25

£557 million in subsidies (part of over £40bn total investment including private sector)

Question 26

What % of UK Gross Value Added comes from financial services?

Answer 26

8.8%

Question 27

How much do financial services contribute to UK exports?

Answer 27

£63bn (2022)

Question 28

What happens to the terms of trade if the US imposes tariffs?

Answer 28

UK ToT worsens → ↓ purchasing power

Question 29

What are 2 pros of Brexit?

Answer 29

No EU budget, more sovereignty

Question 30

What are 2 cons of Brexit?

Answer 30

Labour shortages, ↑ import costs

Question 31

What is the UK-EU TCA agreement?

Answer 31

No tariffs/quotas on most trade

Question 32

What type of exchange rate does the UK use?

Answer 32

Floating exchange rate

Question 33

Why is the UK highly competitive in services?

Answer 33

Financial sector quality and demand

Question 34

What % of the UK population is in relative poverty (2023/24)?

Answer 34

21.1%

Question 35

What % of the UK population was in absolute poverty in 2024?

Answer 35

18.3%

Question 36

What is driving UK poverty levels?

Answer 36

Rising housing and energy costs

Question 37

What drives UK FDI inflows?

Answer 37

Financial services sector

Question 38

What % of UK GDP is public expenditure?

Answer 38

42% (2023)

Question 39

What are the impacts of high public spending?

Answer 39

↑ Welfare & health, but also fiscal deficit

Question 40

How does the UK’s tax system affect competitiveness?

Answer 40

Moderate taxes, but others (Ireland) more competitive

Question 41

What % of GDP is UK debt and what are the causes?

Answer 41

Net debt was approximately 97.7% of GDP - Causes: o COVID-19 support schemes (e.g. furlough) led to a surge in public spending o High borrowing to deal with cost of living crisis and energy price support o Sluggish growth and rising interest payments increased debt servicing costs o Ongoing fiscal deficit means government continues to spend more than it earns