UK Economic Growth

UK slowdown in economic growth

UK slowdown in economic growth

Introduction

The world's economic critical situation of 2005 has forced even the super powers of the world to have a re think on their economic strategies to get themselves out of this crunch. That crunch had affected the economic conditions throughout Europe. Similarly UK was also affected by this crunch and since then policies have been made to recover themselves, but still the whole Europe has not been completely recovered from these worse times. The year 2011 and 2012 have also shown a great slowdown in the economic growth within UK. The euro zone has been collapsing slowly but readily, therefore in these critical times economic growth strategies are certain requirements for the whole Europe if they want to see themselves sustainable in the coming times (Angel, 2009).

There are various factors which have been immensely affected because of this economic meltdown. The unemployment is considered as one of the major factors which is expected to be reaching to its all time high of 12% in UK in the coming year (Angel, 2009). This adverse affect on unemployment has made the whole world under depression because a large amount of people went to Europe for jobs and many of them were unemployed during those times and because the increase in unemployment in Europe, the unemployment rate in the whole world has increased. Another important factor is the continuous decline in UK pounds which was the 3rd most valued currency but this year it has lost its value and reached to 5th position. The whole world saves its reserves in either $US or £UK so any decline in the currency value leads to disintegrate its money demand (Woodford, 2003).

Similarly, other reasons will also be discussed to analyze the overall factors responsible for the economic slowdown in UK. The government is planning a strategy to eliminate the budget deficit in the short run of a single parliament. The economic theory will be used to analyze this strategy and conclusion will be decided on the basis of the theoretical and empirical results.

Discussion

The macroeconomic theory

The factor of growth is one macroeconomic that has an overall effect on the GDP of a country. All the macroeconomic variables including consumption, investment, government expenditures and even net exports heavily depends on it. A small change in the growth of an economy leads to a change in the whole economic policy. The economy of UK is also affected by these factors immensely which showed a noticeable growth decline in the economy. Recent policies and measures which have been taken by the government have covered up a major budget deficit but still budget deficits are there hitting the economy. The major factor that the government is not focusing is to go for a module of single parliament. This will certainly cut down the expenditures of the government as a huge amount of money is spending on the multiple parliament structure. There various factors which affect the growth of UK's ...