With UK interest rates close to zero, who benefits from low-interest rates? In summary, the main effects of low-interest rates are: Savers will get lower interest payments on their savings. Borrowers, especially mortgage owners will see lower interest payments on their debt, increasing discretionary income. The government can borrow from the private sector at a …
Definition – Cyclical Unemployment is unemployment due to a period of negative economic growth, or economic slowdown. In a recession, cyclical unemployment will tend to rise sharply. Peaks in unemployment correspond with swings in the economic cycle. Recessions of 1981,1991/92 and 2008/09 Why unemployment rises in a recession If there are fewer orders for goods, …
UK unemployment rates since 1881. This shows the fluctuations in unemployment over the past 100 years in the UK. Measuring unemployment is not a precise science. This data mostly relies on administrative statistics on the number claiming some kind of unemployment insurance. The government is changing how unemployment is measured. You can view the pdf …
Inflation means a sustained increase in the general price level. The main two types of inflation are Demand-pull inflation – this occurs when the economy grows quickly and starts to ‘overheat’ – Aggregate demand (AD) will be increasing faster than aggregate supply (LRAS). Cost-push inflation – this occurs when there is a rise in the …
In terms of public spending, a deficit is the annual shortfall between spending and tax revenues. Debt is the total amount outstanding to holders of the government’s debt. Definition of deficit and debt Deficit refers to the annual borrowing requirement of the government. (often referred to as budget deficit – or annual net borrowing) Debt …
Economic growth means an increase in real output (real GDP). Therefore, with increased output and consumption we are likely to see costs imposed on the environment. The environmental impact of economic growth includes the increased consumption of non-renewable resources, higher levels of pollution, global warming and the potential loss of environmental habitats. However, not all …
In the UK, house prices have shrugged off both the credit crunch and the longest recession on record. After a blip in 2007-08, house prices are at record levels. It means that UK house prices are relatively very expensive; UK house price to earning ratios are amongst the highest in the developed world. Unfortunately, there …
Household saving is defined as income that is not consumed. Savings can be kept in cash form, saved in a bank account or saved in long-term assets, such as government bonds. Quick summary of factors that influence saving levels Interest rates – higher interest rates make saving more attractive. Rising income enables higher savings. People …