unemployment

Impact of Immigration on UK Economy

Impact of Immigration on UK Economy

In the past two decades, the UK has experienced a steady flow of net migrants into the economy. Net migration is a significant factor in the growth of the UK population. But, does this net migration help or hinder the UK economy? Net long-term migration to the UK was estimated to be 260,000 in the year ending June 2014. This compares to net migration of 182,000 in the previous 12 months. In the past five years, the…

lawson-boom-inflation-growth

Does inflation cause unemployment?

Readers Question: Does inflation causes unemployment? There are a few different scenarios where inflation can cause unemployment. However, there is not a direct link. Often we will notice a trade off between inflation and unemployment – e.g. in a period of strong economic growth and falling unemployment, we see a rise in inflation – see Phillips Curve. Also it is important to bear in mind, (especially in the current climate) If the economy has deflation or very low inflation and the monetary authorities target a modest rate of…

UK unemployment-rate

Unemployment Stats and Graphs

A selection of graphs and statistics on UK measures of unemployment. Also, looking at factors that explain UK unemployment and why unemployment has fallen in recent years. Current UK Unemployment rate Unemployment rate of  6.2%, (July 2014) –  the lowest since late 2008. (page updated Sept 18th, 2014) 2.02 million – (ONS)  (a fall of 468,000 since 12 months ago – biggest fall since 1988) (Scottish unemployment of 6%) Average Eurozone unemployment – 11.5% Recent Unemployment Trends

eurozone-unemployment

European unemployment crisis

Unemployment in many European countries has risen sharply due to the credit crunch and global recession. The worst hit countries include Spain (ES) and Greece (EL), who both have unemployment rates of over 24%. In the past few months, there has been a slight reduction in European unemployment, but, the prolonged period of mass unemployment is leaving significant social and economic problems for the whole Eurozone. Unemployment rate in the Eurozone area: 11.5% (July 2014) EU-28 Unemployment is slightly lower at 10.2% (July 2014) Total unemployment in the EU-28 is…

Should low inflation be the primary objective of economic policy?

Should low inflation be the primary objective of economic policy?

The UK government has given the Bank of England an inflation target of CPI 2 % +/-1. The Bank of England are responsible for using monetary policy (e.g. interest rates)  to achieve this goal of low inflation. But, as well as targeting inflation, the Bank of England also have a wider remit of considering objectives such as economic growth. Summary – Should we aim for low inflation as the primary objective? Since the spikes in inflation during the 1970s and 1980s, many economies have prioritised low inflation as the primary objective…

The depth of the European recession

The depth of the European recession

Interesting graph which shows the depth of the EU recession compared to the great depression of the 1930s. Source stats | via Krugman UK recession compared This graph is from the start of 2013. Since, then the UK economy is showing signs of  picking up. But, it is still worth bearing in mind the length of the decline in GDP since the start of the recession.

UK Unemployment Target

UK Unemployment Target

The new Bank of England governor, Mark Carney, has implemented a type of unemployment target. As part of forward guidance, the Bank of England state that: Interest rates won’t rise from 0.5% until unemployment falls below at least 7%. Essentially, the bank are committing to expansionary (loose) monetary policy until there is a stronger economic recovery and unemployment has fallen. The hope is that the commitment to low interest rates will encourage firms to invest and consumers to spend. However, this unemployment target of 7% has a few caveats.  The unemployment target…

The UK Unemployment Mystery

The UK Unemployment Mystery

A strange feature of the past two years, has been a largely unexpected fall in UK unemployment. Recently, the ONS said there were 2.49 million people unemployed,  185,000 less than on a year earlier. It is the lowest unemployment rate since spring 2011. Usually, in a recession, you would expect a rise in unemployment because falling demand causes firms to get rid of surplus workers. (see: demand deficient unemployment) For example, after the much milder 1981 recession, UK unemployment rose to over 3 million (around 11%) and remained…