UK Macroeconomy Stats 2019

Question 1

Annual Growth Rate in 2018

Answer 1

Only 1.4%; lowest annual growth rate since the last recession (impact of Brexit on the economy)

Question 2

Quarterly Growth Rate in Last Quarter of 2018

Answer 2

Only 0.2% (very close the recession territory as a result of Brexit slowing down the economy)

Question 3

Long Term Growth Rate

Answer 3

Since the Financial Crisis, long-term growth rates are around 1.5%.

Because of this, we are now experiencing a positive output gap of an estimated rate of 0.2% of GDP (Impact of Financial Crisis)

Question 4

Growth Forecast of 2019

Answer 4

Only 1.2% because this is the year that we are officially leaving the EU and the uncertainty of Brexit is having a considerable impact on growth

Question 5

Real GDP per Capita

Answer 5

£29,000

Question 6

Total GDP

Answer 6

£2 trillion

Question 7

GDP Composition

Answer 7

79% Services
14% Manufacturing
6% Construction
1% Agriculture

Heavy dependence on legal, financial, education services which are a key component of the UK economy

Asymmetric growth and unbalanced economy which requires improvement

Question 8

Unemployment Rate

Answer 8

Lowest unemployment rate (3.9%) since 1975

Question 9

NRU

Answer 9

4%; below NRU means that we are in a small positive output gap, and so the labour market is very tight.

Question 10

Long-term Unemployment

Answer 10

Very low at 1.1%

Question 11

Comment on Wage Growth and Inflation

Answer 11

Wage growth (3.4%) is faster than inflation (1.9%), rising real wages, to be expected when labour market is very tight and unemployment is very low.

High wage bargaining
More real disposable incomes for workers

Question 12

Consumer Confidence

Answer 12

Since January 2019, consumer confidence has been very weak due to the Brexit mess and surrounding uncertainty.

Unknown future, job prospect, or future unemployment rates

Consumers are very concerned about the impact of Brexit on them and their personal finances

Question 13

CPI Inflation

Answer 13

1.9%; very close to 2% target

Question 14

Producer Price Inflation

Answer 14

2.4%; price rises of good as they leave the factory

CPI inflation is likely to rise in the future.

Question 15

Budget Deficit

Answer 15

2% of GDP: when Austerity started in 2010, budget deficit was very high and has now fallen dramatically

Question 16

Budget Deficit Forecast

Answer 16

Fall to 0.8% by 2023

Question 17

National Debt

Answer 17

83% of GDP; forecast to fall to 74% by 2023.

Question 18

Bond Yields

Answer 18

1%; meaning that it is cheap for the government to borrow

Question 19

Corporation Tax

Answer 19

19% (down from 28% in 2010); however other countries have reduced it also.

Question 20

Interest Base Rate

Answer 20

0.75% (Very low)

Question 21

Business Confidence

Answer 21

Very weak since Brexit vote

Question 22

Most Recent QE

Answer 22

August 2016; £60bn to stave off a recession after the Brexit vote

Question 23

Total QE

Answer 23

£435bn

Question 24

Willingness to Lend

Answer 24

Very poor, banks are very concerned about risky lending, especially to small and medium enterprises.