I N DE PTH
UK Economy
Under the Whitonomics Microscope
I
Dominic Krajewski raised by economists that our recovery their production, there will be a need
n a world still occupied by the
political furore that is the crisis in
Syria, coupled with debates over
the location of the next 2022 World
Cup and our new approach to fighting
Islamic extremism, it seems most
of us have turned a blind eye to the
promising spouts of growth from our
own domestic dilemma. Out from the
darkened days of the financial crisis,
the UK economy has set to develop
new roots in a bid to anchor the latest
attempt at a sustainable recovery.
is too imbalanced. It is argued that our
economic growth is fuelled too much
by overconsumption from households
buying goods and services. Whereas
more planned capital investment
projects are needed from firms so as to
ensure the economy does not run out
of spare capacity. If this does not occur
then in the long term our economy
may overheat and firms will not have
the level of technology to keep up with
demand from consumers and instead
will raise prices.
The UK has forever been at the heart
of world trade, being listed as the 6th
largest economy by the World Bank
and the home to a global financial
centre. But how has David Cameron
reacted to the fresh set of challenges
which threaten to stifle our prospects
of continuing that legacy?
Low Unemployment
Economic Growth
Economic growth is the foundation of
a successful government policy, where
an economy attempts to better itself
year-on-year. Recently, UK economic
growth was recorded in the second
quarter of the year at 0.7% by the
Office for National Statistics (ONS),
stating major improvements of output
in construction and manufacturing
sectors such as pharmaceuticals,
defence and aerospace industries.
However, there are serious concerns
In order for an economy to be selfsustaining, people must be earning
themselves a living and not be relying
on the state. The man responsible for
this objective, Mark Carney (Governor
of the Bank of England) has therefore
given forward guidance to firms and
consumers by setting a commitment to
keep interest rates at rock bottom till
unemployment falls below 7% from
the current statistic of 7.7%.
You may be wondering how low
interest rates can possibly affect
the amount of people in a job. With
interest rates at 0.5%, there is an
incentive for households and firms not
to save and to instead take advantage
of cheap loans with increased
spending. Hence, if more consumers
are buying goods and services, and
firms are spending more on increasing
for further staff to be recruited.
These plans heed well for an economy
that displays a depressing statistic of
2.49 million workers currently jobless,
of which 960,000 are young people
aged 16-24.
Balance of Payments Equilibrium
The UK’s balance of payments simply
measures the difference between the
value of their exports and the value of
imports. A trade deficit would reflect a
larger amount of imports in relation to
exports and a trade surplus would be
vice versa.
So far it has been positive reading for
UK well wishers, growt