Unemployment and Inflation
1. Describe the trends in unemployment and inflation
The number of people out of work fell by 14,000 to 2.5 million in the three months to December 2012 (ONS).The unemployment rate was 7.8%, of the economically active population, down 0.1% on July to September 2012. A few months after the start of the recession in 2008, unemployment started to rise sharply. When the global financial crisis hit, the unemployment rate was a little over 5% or 1.6 million. Towards the end of 2009, with the UK coming out of its severest recession since the 1950s, it was almost a million higher at 2.5 million, or 8%.Unemployment peaked at almost 2.7 million at the end of 2011, its highest level for 17 years.
The rate of inflation in the UK remained unchanged for the fourth consecutive month in January. The rate as measured by the Consumer Prices Index (CPI) stayed at 2.7%.The rate of Retail Prices Index (RPI) inflation rose to 3.3% in January from 3.1% in December 2012, according to the Office for National Statistics. In 2008, as the global financial crisis was taking hold, prices were rising at an annual rate of about 5%.
2. Explain the main causes of these trends
For a long time now, the UK have been suffering from high long term unemployment rate, a cause of this could be cyclical unemployment; this exists when individuals lose their jobs as a result of a downturn in aggregate demand. Britain have been in recession which means AD has decreased causing unemployment.
After the financial crisis there has been issues with confidence amongst
3. Comment on the greatest danger to the UK economy at the present time; unemployment or inflation.
AD
Confidence
Frictional
Neets hysteresis
Inflation;
3. greatest danger is unemployment. Inflation is ….. which is close to the target 2.0, danger of inflation
However high level of unemployment could be more damaging the the UK economy.
Reduced standard of living as an increasing number of people are living
The number of people out of work fell by 14,000 to 2.5 million in the three months to December 2012 (ONS).The unemployment rate was 7.8%, of the economically active population, down 0.1% on July to September 2012. A few months after the start of the recession in 2008, unemployment started to rise sharply. When the global financial crisis hit, the unemployment rate was a little over 5% or 1.6 million. Towards the end of 2009, with the UK coming out of its severest recession since the 1950s, it was almost a million higher at 2.5 million, or 8%.Unemployment peaked at almost 2.7 million at the end of 2011, its highest level for 17 years.
The rate of inflation in the UK remained unchanged for the fourth consecutive month in January. The rate as measured by the Consumer Prices Index (CPI) stayed at 2.7%.The rate of Retail Prices Index (RPI) inflation rose to 3.3% in January from 3.1% in December 2012, according to the Office for National Statistics. In 2008, as the global financial crisis was taking hold, prices were rising at an annual rate of about 5%.
2. Explain the main causes of these trends
For a long time now, the UK have been suffering from high long term unemployment rate, a cause of this could be cyclical unemployment; this exists when individuals lose their jobs as a result of a downturn in aggregate demand. Britain have been in recession which means AD has decreased causing unemployment.
After the financial crisis there has been issues with confidence amongst
3. Comment on the greatest danger to the UK economy at the present time; unemployment or inflation.
AD
Confidence
Frictional
Neets hysteresis
Inflation;
3. greatest danger is unemployment. Inflation is ….. which is close to the target 2.0, danger of inflation
However high level of unemployment could be more damaging the the UK economy.
Reduced standard of living as an increasing number of people are living