www.statistics.gov.uk – National Statistics Online

National Statistics online has had a well overdue make over. The new web design takes up the whole screen and is easier to navigate and read. It also comes with RSS feed which is useful

For any economist, National Statistics Online is a very useful resource for finding latest data and statistics and understanding some of the changes which occur. It includes a broad snapshot of the economy, with the main economic indicators.

  • Economic Growth
  • Inflation
  • Balance of Payments
  • Unemployment
  • Productivity
  • Consumer spending

It is an excellent site for an A Level student to visit and try and understand.

There are also interesting statistics on population and social demographics which might influence economic trends.

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Government Debt Statistics 2008

Readers Comment It is shocking to me that revenues from all my future income tax and even my young children’s future tax payments have already been committed by our national debt. If it is not some kind of nefarious carve-up, why would the UK wage 2 unnecessary wars costing billions when we do not have the money.

debt is a burden on the future, a gamble on increasing growth and prosperity how can that mesh with a rapidly expanding population on a small delicate planet with finite resources?

We are borrowing the money for these wars, and paying interest to private entities !!
Am I right saying that the BofE sells and buys bonds when it wants more cash?

  • If the government needs to borrow money then the Bank of England sells government-backed bonds to the private sector. This is how the government raises revenue. When the government has a budget surplus it can buy back more bonds than it sells.

Government Debt

  • Government borrowing does create a burden on the future Future Taxpayers will have to pay debt interest plus the debt. (Interestingly, the current payments on debt interest payments are equivalent to total spending on defence.)
  • The Benefit of borrowing now is that current taxpayers benefit from lower tax rates (than they should be) and/or higher government spending. Borrowing can be beneficial if it is invested in improving long term productive capacity of the economy.
  • The problem is that reducing national debt now would exacerbate the economic downturn. e.g. higher taxes would reduce consumer spending and lead to slower growth.
  • The government predicted (hoped) continual economic growth would keep national debt manageable, but, the economic slowdown means National debt will increase by more than they expected.
  • You could argue the government have wasted the last 15 years of economic growth. This would have been a good time to keep reducing national debt as a % of GDP, rather than allow it to rise. (from 29% of GDP in 2003 to 40% now)

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Calculating the Price Elasticity of Demand for Petrol In US

Readers Question: How could you calculate the price elasticity of demand for petrol in the united states when the figure is 0.48?   To calcuate the elasticity of demand, we divide the % change in quantity by the % change in price. For example, if the price of petrol in the US increased by 60% …

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US Trade Deficit with China

USA’s trade deficit with China was $201.6 billion in 2005, an all-time high for a trade deficit with any country. Explain some possible causes of a balance of trade deficit and consider if the USA should be concerned over its trade deficit with China. Reasons for Balance of Trade Deficit Between US and China 1.Undervalued …

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How inflation affects the real value of Mortgage Payments

Readers Question: I understand why, generally, low inflation is considered to be a good thing and why high inflation is bad particularly if you have savings whose value in real terms then diminishes faster.

What I do not understand is why inflation is not in fact a good thing for those of us in their late 30s, saddled with a huge mortgage, two kids, and no savings to speak of. Surely once I have bought a house for £x, what I really want is for the cost of it (which is of course fixed when I hand over the purchase price – this is nothing to do with what happens to the VALUE of the property in future since that only has an impact if I ever sell) in real terms to drop as quickly as possible, so that the cost of borrowing to fund it becomes a smaller part of my income as quickly as possible?

To give an extreme example, my parents bought their first house in 1964. They paid about £1500. This felt like a fortune at the time, but they could probably get an overdraft to refinance it now, if they had only ever had an interest only mortgage! And the interest payments themselves, though a struggle in 1964, would be a quite trivial amount relative to their income now.

So surely if inflation hits 10% (I know that is unlikely, but let’s just say, for the sake of argument), and since I do not propose to move again, then the cost of my house (which remains thus static at what I paid for it) IN REAL TERMS will drop faster so that, assuming my salary at least keeps up with inflation, I’m going to be better off than if the £300,000 I paid still “feels” like £300,000 in 10 years’ time?

Thanks for the question. You raise a good point. Inflation is generally considered to be a damaging thing for the economy. There are many costs of inflation such as uncertainty, declining competitiveness, menu costs. For full explanation see: Costs of inflation. However, although inflation is generally bad, there are some people who will benefit from inflation (as long as nominal wages rise faster than inflation)

If you keep money under your bed, inflation will reduce the value of your savings. But, if you borrow a fixed amount, inflation makes it much easier to pay back (assuming wages keep pace with inflation, which generally they do in OECD economies)

When people are considering whether to buy or rent, they often forget the importance of inflation. They look at the cost of mortgage payments and focus on how expensive they are. But, these mortgage payments historically, decline in real terms over the course of the mortgage.

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A Level Inflation Leads to University Admission Tests

25 years ago, 12% of candidates received a grade A at A Level. Last year, that % rose to 25%. Maybe there are people in the government, who really feel that educational standards have increased by 100%. However, anyone involved in A Levels knows this is mainly due to changing grade boundaries so that a …

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Innovation, Patents and Economic Growth

Readers Question: What economic factors should I consider if I want to know the relationship between innovation and the presence of patents/copyrights? Do copyright/patents (generally Intellectual Property Rights) stifle innovation? Does it slow down economic growth?

There is some debate. But, one argument is that patents are necessary to encourage innovation. If firms were unable to patent new machines, they would have less incentive to spend the necessary money on research and development. Research and Development is risky and expensive; a firm may have to spend millions of pounds on developing new technology. If the technology was then freely available to all firms the market would be competitive and therefore, they would not make sufficient profit to justify the investment. Also, it is argued that investment for innovation is paid for out of retained profit. So current patents on drugs are in effect financing future innovation. (This is certainly what the drug companies will say)

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An Economist’s Tips for Investing in Stock Market

When people hear that I am an economist, I often get asked for advice for buying and selling shares; I don’t know why because I am completely hopeless at knowing which shares to buy. To be honest, I don’t buy any shares for the very good reason that I don’t have any money to invest. If I did have any money, I would probably get a copy of the financial times and use a drawing pin. So when I’m asked about shares I usually feel a slight sense of guilt as I wax lyrical about interest rate futures, and Price to earnings ratios – trying to sound knowledgeable without actually giving any particularly useful advice.

When investing in the stock market it is worth bearing in mind.

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