Readers Question: The topic I am interested is in the causes of economic growth based mainly in the UK over the last 10 years. I guess technology has not played a big part in UK as much as other countries such as Japan, India & China. In my opinion, UK is consumer led and investment led in businesses and properties abroad. What’s your view on this? Also what do you think have been the main causes of economic growth over the last 10 years?
I had a look for statistics on the cause of economic growth. I think it is fair to say that UK economic growth in the past 10 years has been mainly consumer led. This reflects
- Low Savings ratio. The savings ratio approached 0% in recent months. Personal consumer debt is very high. (personal debt UK) People have been borrowing to finance consumer spending
- Mortgage equity withdrawal. Up until July 2007, mortgage equity withdrawal (taking money from the value of your house by remortgaging) was quite a significant boost to consumer spending. With house prices falling this has dried up. (mortgage equity withdrawal and economic growth)
- Current Account Deficit. Stood at 3.8% of GDP in 2007. This reflects how consumer spending has been rising faster than exports. (UK Balance of payments)
It is difficult to measure the relative importance of technology, innovation and other supply side factors. It would be important to look at productivity growth which is important for determining growth of Aggregate supply.
1 comment so far ↓
on the factors that will be affecting the demand for the following product in the next several years.do you thingk these factor will cause the demand to increase or decrease?
a.convenience foods (sold in food shop and supermarket)
b. products purchased on the internet
C. flim and cameras
D.video (VHS) rented from retail outlet
E.pay per view televission programming
Leave a Comment