growth
- low in the UK economy at the moment due to high interest rates, still quite high food/raw materials prices, low consumer confidence - Trumps tariffs
- annual growth rate in 2024 1.1%
- annual growth forecast only **0.75% (BoE)
- negative output gap
- 79% of GDP services - not diverse (hold us back)
unemployment
- lower employment rate than prior pandemic in 2022 but now increeasing again - due to rising economic inactivity 21% (mental health issues, older people not come back post COVID)
- resulted in high wage growth in UK due to strong bargaining power
- very weak consumer confidence - Inflation crisis, Trumps crisis
Inflation
- peaked at 11.1% in October 2022 - much lower now at 2.6% in 2025, likely to remain low due to weak consumer confidence
- possible rise due to higher costs? (Trumps tariffs)
Trade
- current account deficit
- very poor productivity/weak investment (since Brexit) keeping UK uncompetitive
- high min wage of £12.21/hour = uncompetitive
- despite weak pound: lack of manufacturing in UK and we tend to import necessities: Marshall learner issue
Gov finances
- budget deficit
- national debt high
Taxes: - income tax bands frozen until April 2028 - tax rise (due to pay rise due to inflation meaning they are not actually better off and so have tax rise) - fiscal drag
- increase in corporation tax to 25%
- VAT at 20%
- gini coefficient increasing
Interest rates
- BofE Base rate 4.25%: rapidly increasing recently due to inflation but cut in last couple of months
- weak business confidence (Trump)
- high savings ratio: cost of living crisis/low confidence
formulas:
Weighted Price Index (CPI)
Multiplier
Index number
Absolute poverty
Terms of Trade
CPI: covert prices to index, multiply by weights, add up weighted prices, divide by total weights
Multiplier: 1/(1-MPC) or 1/MPW
Index number: Current year/Base year x100
Absolute poverty: <$2.15/day
Terms of trade: PofX/PofI x 100
globalisation in China
Benefits:
- 14.4% of world exports in 2023: largest exporter
- considerable FDI
- since opening up economy in 1970s, annual growth of 9-10% but decreased more recently at only 3% in 2022
- jobs: 800 million out of poverty in the last 40 years
Costs:
- 28% CO2 emissions 2023
- income inequality
USA trade war - trumps tariffs
USA-China trade war:
- Trumps baseline tariffs of 10% on all imports
- escalated to 145% with China retaliation of 125% but now brought back down to 30% and 10% for 30 days
trade deals
New trade deal with India: cut tariffs on 90% of UK imports
