The recent macroeconomic performance of Britain can be measured using a number of different indicators: Its economic growth (!"#$ %e&e%s of unemp%o'ment$ the rate of price inf%ation (i(e( the annua% percentage change in the price %e&e%# and trade) the ba%ance of pa'ments in trade in goods and ser&ices and net f%ows of in&estment income * representing the effects of trade and in&estment between countries( Britain is one of the wor%d+s %eading ad&anced economies) it has en,o'ed consistent and sustained growth for a &er' %ong period of time$ as shown b' the rise in !"( This period of continuous growth stretches bac- to 1992$ the %ongest sustained e.pansion for o&er fort' 'ears( /owe&er$ in 2000$ rea% !" grew b' 1(12$ the s%owest pace of growth for twe%&e 'ears( Ben Varian Tr 19/09/2014 3&er 24 per cent of the 56+s !" in 2000 came from e.ports of goods and ser&ices( Imports amounted to 71(0 per cent of nationa% income %eading to a %arge trade deficit in goods and ser&ices with other countries( The components of the 56+s current account ha&e changed radica%%' in recent 'ears) the 56 has shifted from being an industria% nation with %arge mining and stee% industries to a more ser&ice based trading power( 8o much so that it is the second biggest e.porter of ser&ices in the g%oba% econom' and ran-ed eighth in g%oba% e.ports of goods( In 2009 the 56 wi%% contribute 7 per cent to g%oba% output( But the huge trade deficit sti%% remains$ the reasons for this being that 56 consumers ha&e a &er' high margina% propensit' to import (:":#$ meaning that imports wi%% a%wa's be greater than e.ports therefore there wi%% a%wa's be a trade deficit with goods( ;%so the strong sustained growth of rea% !" which the 56 has e.perienced has %ed to an increased demand in inputs( <ina%%' the strong e.change rate has had a %arge impact on the 56 trade deficit) it has caused a %oss of price competiti&eness for e.porters with imports appearing re%ati&e%' cheaper to consume( Thus whi%e the consistent rise in !" has genera%%' been positi&e it does incur negati&e effects as we%%( Ben Varian Tr 19/09/2014
The diminution in 56 price competiti&eness and rise in consumers+ :": has incurred a shift in the focus of the 56+s internationa% trade( ;s a resu%t of this change in the 56+s ro%e in internationa% trade$ emp%o'ment in the 56 manufacturing Industr' has more or %ess continua%%' diminished annua%%' for the past thirt' 'ears( The si=e of Britain+s pre&ious%' massi&e coa% and stee% industries has been significant%' reduced in recent 'ears /owe&er the occupationa% immobi%it' of %abour has decreased significant%' as we%% in con,unction with the rise in !" and the shift in Britain+s ro%e in internationa% trade( ;s a resu%t of this 56 unemp%o'ment has been e.treme%' %ow and the main e.p%anation for it is the 56+s growth) more growth$ means more demand which means a greater demand for wor- and therefore reduced unemp%o'ment( But growth does encourage other secondar' factors which a%so he%p to bring down unemp%o'ment e(g( increased foreign in&estment brings more ,obs$ increased spending on education Ben Varian Tr 19/09/2014 and increased spending on wor-er training$ these a%% ha&e contributed to the dec%ine in unemp%o'ment in the 56+s recent economic histor'( >hi%e in 2000/09 there has been an increase in unemp%o'ment it is on%' a &er' gradua% one which wi%% probab%' be rectified within the ne.t few 'ears as the 56 aims for what was once thought impossib%e: 1002 unemp%o'ment (discounting fractiona% unemp%o'ment#( The fina% aspect of the 56+s macroeconomic performance which I am going to consider is: inf%ation( "rices in Britain and a%% around the wor%d o&er the past twent'? thirt' 'ears ha&e risen consistent%' and rapid%'( This has happened in con,unction with the rise in the 56+s !" Ben Varian Tr 19/09/2014 The 5nited 6ingdom is one of the wor%d+s %eading ad&anced economies( It has the second %argest econom' in the @uropean 5nion (@5# behind erman' and ,ust ahead of <rance and In terms of per capita nationa% income$ the 56 is ran-ed in the top fifteen nations of the wor%d and in 2009 it is forecast that the 56 wi%% ha&e a per capita income (""" ad,usted# of A71$029 some distance behind that of the 5nited 8tates and a%so Borwa' and Ire%and$ two of @urope+s richest countries(