Current state of Economy

Readers Question: How is the UK economy currently performing in terms of the macro objectives of the british goverment?

Badly.

See UK Economy in 2009

Main Objectives

• Economic growth positive and stable (long run trend rate is around 2.5%) currently growth is negative. Q4 of 2008 was very disappointing pushing UK into official recession.
• Inflation target of 2%. CPI is close to target, but predicted to fall below target soon, creating potential of deflationary pressures
• Unemployment. Rising to over 2 million. Many feel it is almost infeasible to stop unemployment rising to 3 million.
• Current account deficit. The recession and fall in pound has brought some improvement and reduction in deficit. But, this is hardly much comfort.
• Government borrowing. This year could see the largest peacetime level of government borrowing. The recession has hit tax revenues hard and the government have been forced to bailout the banks. National debt has increased from 35% of GDP to 45% of GDP. (New accounting rules will send it to 150% of GDP when liabilities of nationalised banks are included)