Economic growth during Covid-19
UK economy shrinks 20.4% in April 2020
(fall in economic growth)
Real GDP after lockdown
slowly rising
Long term economic scars from pandemic
- collapse of many retail businesses
- hundreds of thousands of job losses in industries such as air transport, arts and entertainment
How did corona crisis affect migration?
decline in net inward migration of labour
- reduces country’s productive potential
- current shortage of labour = higher wages
Interest rates
UK interest rates reduced to 0.1% March 2020 (first lockdown)
Deflationary spiral
US 1929
- decreased real GDP by 25%
- unemployment reached 25%
How much gov rev does government get from taxing richest 1%?
27% of income tax in 2016
Quantitative easing
UK between 2009 and 2012 created £375bn
Hyperinflation
Germany 1920’s
bread rose from 200 marks to 200 trillion marks
Countries with negative interest rates
Sweden -0.5% from 2016 to Jan 2019
Government reducing unemployment
furlough scheme - 9.6 million workers covered by it
Inflation
UK inflation rate = 10.4% in Feb 2023
Increase cost of production
increase in oil and energy prices due to Russia-Ukraine war
Biggest contributors to inflation
- housing and bills
- food and drinks
- restaurants and hotel
Public sector wages compared to inflation (2023)
- prices = 10.4%, public sector = 4.8%
Private sector wages compared to inflation (2023)
- prices = 10.4%, private sector = 7.0%
UK interest rate and why
4.5% to combat inflation
Unemployment rate December 2022
3.7%
Forecast being wrong
March 2016 forecast UK investment positive trajectory
- actually fell during covid
Supply side policy - government failure
- HS2 - was £33bn now £71bn
- expected by 2026, now between 2029 and 2033
Corporation tax UK
19% risen to 25% (April 2023)
raise government rev by £20bn a year
