uk economy presentation

Our use of cookies

We use necessary cookies to make our site work (for example, to manage your session). We’d also like to use some non-essential cookies (including third-party cookies) to help us improve the site. By clicking ‘Accept recommended settings’ on this banner, you accept our use of optional cookies.

Necessary cookies

Necessary cookies enable core functionality on our website such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytics cookies

We use analytics cookies so we can keep track of the number of visitors to various parts of the site and understand how our website is used. For more information on how these cookies work please see our Cookie policy .

'EconoME' is a free education resource from the Bank of England. 

It’s designed to help young people understand the economy better and provide them with the analytical skills to make informed decisions.

The material was created by educational experts in consultation with the Bank of England. It is accredited by the PSHE Association and Young Money . 

Focusing on the role of decision making in the economy, econoME is organised into four lessons, each building on material covered in the last: 

Lesson 1: What influences my decisions? Explore a variety of factors that influence decisions, including the economy. Lesson 2: How can I make informed decisions? Explore the process of decision-making including the sourcing and analysing of reliable information. Lesson 3: Why do my decisions matter? Consider the consequences of any decisions your students might make – for themselves, others and the economy. Lesson 4: How can I manage financial risk? Students explore the benefits of saving, borrowing and protecting their money. Then, help them recognise a scam and how to avoid it.

Taken together, the four lessons will help students to understand how the decisions they make both affect, and are affected by, the economy. Students will also have the chance to practise the skills necessary for making informed decisions more broadly, from gathering and analysing information to weighing up pros and cons and reaching considered conclusions.  Students will explore the benefits of saving and borrowing, the effect of interest rates, different types of lender and the difference between manageable and unmanageable debt. The lesson will also help students understand some of the risks around financial fraud and scams, and how to avoid them.

Each lesson comes complete with lesson plans, activities and PowerPoint presentations. Also included are short films featuring explanations from Bank of England experts, as well as a glossary of useful terms. 

EconoME has been designed to be accessible for students and teachers alike. Lessons can be taught without any previous economic training, and resources have clear links to relevant national curriculum programmes of study including:

• PSHE and PSE
• Citizenship
• Social Studies 
• Health and Wellbeing
• Learning for Life and Work
• thinking, problem-solving and decision-making.

EconoME is FREE to download and is available in English and Welsh.

Access the econoME resources

Sign up for our education newsletter

This video requires third-party analytical cookies to play. Read our cookie policy for more information.

Video transcript - EconoME: What is the economy?

What does the word economy mean to you? You’ve probably gathered that it’s to do with money but you might not have realised that it’s also about you. Economic decisions are being made all the time. These decisions affect things like whether you have a job. What you earn and what you do with your money. What’s happening in the economy directly affects your decisions. The economy is like a big network of different parts that work together and influence each other. A decision made by one part can have a knock on effect on the rest. Let’s take a closer look.

Let’s start with you. Most people play a part in the economy by being a consumer. That’s someone who spends money. Consumers make decisions about what they buy and how much they spend. Many consumers also receive money. They might be employed by business and receive wages. They might be self-employed like plumbers or hairdressers who run their own businesses and receive money from people who buy their services. Or they might be retired or unable to work and receive a pension or benefits from the government.

Businesses make money by selling goods or services for more than they pay for them. They decide the prices they charge, who they employ, and how much they pay their employees. If businesses are successful, they grow, and they can afford to employ more people or pay their staff higher wages.

Businesses sometimes have to buy goods or services from other businesses. For example, a fashion shop might buy its clothes from a clothing manufacturer. The manufacturer depends on the fashion shop for its income so it needs the fashion shop to be successful.

High street banks are not that different from any other business. What sets them apart is that they work with money. Looking after it, lending it and helping you pay for things. They let both consumers and businesses save or borrow money. When someone saves with a bank, the bank pays them a little extra money. When someone borrows, the bank charges a little extra money. This extra is called interest. If you borrowed a thousand pounds and the interest rate was 5%, you’d have to pay back the original amount, plus 5% of it. So fifty pounds extra. The interest rates offered by banks can have a powerful influence on your decision to either borrow or save money with them. The economy works in a delicate balance, with money flowing from one part to another. Too much or too little can lead to problems like unaffordable living costs or lots of people being without a job. There are two institutions that make important decisions to control the amount of money flowing around and to keep the economy stable. But who are they?

The government aims to have strong, stable, economic growth helping businesses thrive. It decides how much money or tax to demand from workers and businesses. And then how to spend this money to benefit UK citizens. For example, by running hospitals or schools.

Tanveer, Head of Division: The Bank of England is very different to high street banks. For a start we have over 400,000 gold bars downstairs here in the vaults worth over £100 billion. But our main job, which has been for over 300 years, is to look after the UK economy and the financial system. 

Emily, Analyst: A key responsibility of the Bank of England is to ensure that you and I have access to the banknotes we need every day to make payments.

Tanveer: We also make sure that you can make electronic payments 24 hours a day. Another job is to make sure that the high street banks, with which you save and borrow, are safe and sound. The Bank of England also plays an important role in keeping the UK economy strong and stable. The Bank sets bank rate which is a key interest rate in the UK economy. It is used to influence high street banks from which people and businesses borrow or save. 

Aakash, Analyst: At the Bank, one of the biggest decisions we have to make on a regular basis is whether Bank rate should be increased or decreased, or whether it should just stay the same.

Andy, Chief Economist: So our decisions at the Bank of England affect you, very much, every day of your life.

When interest rates are higher, saving is more beneficial so people tend to save more. It’s more expensive to borrow money so people tend to borrow and spend less. When interest rates are lower, loans are cheaper so people tend to borrow and spend more. Businesses can thrive. But if there is too much money in the economy, and too much demand for goods, prices tend to rise. Of course the price of some things will go up by more than others and some prices may go down. But when most prices go up, we call it inflation. 

One of the jobs of the Bank of England is to keep inflation at 2% per year. If inflation looks set to go above the 2% target, the Bank of England would probably increase interest rates to encourage people to spend less. But if inflation looks likely to fall below the 2% target, the Bank of England would probably cut interest rates to boost spending in the economy. Expert economists at the Bank of England make informed decisions about the level of prices in the economy, and whether prices are rising or falling too quickly. They then adjust bank rate to keep prices stable.

As we’ve seen, along with other influences like family, friends and the media, the economy can play an important part in influencing your decisions. So next time you hear the word economy, pay attention. They’re talking about your life, your decisions, and your future.

Back to top

Live revision! Join us for our free exam revision livestreams Watch now →

Reference Library

Collections

• See what's new
• All Resources
• Student Resources
• Assessment Resources
• Teaching Resources
• CPD Courses
• Livestreams

Study notes, videos, interactive activities and more!

Economics news, insights and enrichment

Currated collections of free resources

Browse resources by topic

• All Economics Resources

Resource Selections

Currated lists of resources

• Teaching PowerPoints

Presentation on the UK Economy

Last updated 25 Apr 2019

• Share on Facebook
• Share on Twitter
• Share by Email

Here is the updated presentation (April 2019) on the UK economy that I delivered at the Watford Boys Grammar School revision day this afternoon. Hopefully lots of useful context here to add into your revision notes.

You might also like

Policy Analysis of Key 2015 Election Issues

30th April 2015

Has Britain coped better than in previous recessions?

18th October 2015

Unemployment and Inflation in the UK Economy

Topic Videos

Is it time to abolish the OBR?

30th November 2016

ONS reimagines how to measure the economy

5th August 2017

The UK Economy in 2018 - Essential Exam Update

Consumers spent less and saved more in 2020.

4th January 2021

70 Years On - the UK still looks for an Economic Miracle

8th June 2022

Our subjects

• › Criminology
• › Economics
• › Geography
• › Health & Social Care
• › Psychology
• › Sociology
• › Teaching & learning resources
• › Student revision workshops
• › Online student courses
• › CPD for teachers
• › Livestreams
• › Teaching jobs

Boston House, 214 High Street, Boston Spa, West Yorkshire, LS23 6AD Tel: 01937 848885

• › Contact us
• › Terms of use
• › Privacy & cookies

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.

• My presentations

Auth with social network:

Download presentation

We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!

Presentation is loading. Please wait.

Introduction to the UK Economy

Published by Leona Craig Modified over 5 years ago

Similar presentations

Presentation on theme: "Introduction to the UK Economy"— Presentation transcript:

AS/A2 The national economy The UK Economy: a Health Check How well has the economy been performing, and whats round the corner? The UK Economy: a Health.

Balance of Payments Adjustment Policies

Irelands Economic outlook David Duffy. The Outlook Dependent on world trade growth If forecast recovery materialises then Irish growth will improve in.

Aggregate Demand.

Chapter 12 Managing the Macroeconomy. Stagflation: it occurs when recession and inflation takes place simultaneously in the economy.

Copyright © 2006 Pearson Education Canada Fiscal Policy 24 CHAPTER.

22 Aggregate Supply and Aggregate Demand

The National and International Economy What is macroeconomics? Macroeconomics considers the performance of the economy as a whole.

Q 40 drop Click to start.

Growth of the Economy And Cyclical Instability

Introduction to Macroeconomics

Certificate for Introduction to Securities & Investment (Cert.ISI) Unit 1 Lesson 12:  The impact on markets of economic data  Gross Domestic Product.

 Circular Flow of Income is a simplified model of the economy that shows the flow of money through the economy.

Unit Two Macroeconomic Tools. Circular Flow See the chart on the board A little more detail.

Macroeconomic Goals and Instruments

© The McGraw-Hill Companies, 2002 Week 8 Introduction to macroeconomics.

Monetary Policy Update September Figure 1. Repo rate with uncertainty bands Per cent, quarterly averages Source: The Riksbank Note. The uncertainty.

Essential Standard 1.00 Understand the role of business in the global economy. 1.

Gross Domestic Product (GDP) What is Gross Domestic Product and how we measure it? Why is this measure important? What are the definitions of the major.

6.02 Understand economic indicators to recognize economic trends and conditions Understand economics trends and communication.

About project

© 2024 SlidePlayer.com Inc. All rights reserved.

Cookies on GOV.UK

We use some essential cookies to make this website work.

We’d like to set additional cookies to understand how you use GOV.UK, remember your settings and improve government services.

We also use cookies set by other sites to help us deliver content from their services.

You have accepted additional cookies. You can change your cookie settings at any time.

You have rejected additional cookies. You can change your cookie settings at any time.

Business insights and impact on the UK economy: 2 May 2024

The impact of challenges facing the economy and other events on UK businesses. Based on responses from the voluntary fortnightly business survey (BICS) to deliver real-time information to help assess issues affecting UK businesses and economy, including financial performance, workforce, trade, and business resilience.

https://www.ons.gov.uk/releases/businessinsightsandimpactontheukeconomy2may2024

Official statistics are produced impartially and free from political influence.

Is this page useful?

• Yes this page is useful
• No this page is not useful

Help us improve GOV.UK

Don’t include personal or financial information like your National Insurance number or credit card details.

To help us improve GOV.UK, we’d like to know more about your visit today. We’ll send you a link to a feedback form. It will take only 2 minutes to fill in. Don’t worry we won’t send you spam or share your email address with anyone.

UK set for weak growth and highest inflation in G7, OECD says

• Medium Text

Sign up here.

Reporting by Andy Bruce, Editing by Paul Sandle, Tomasz Janowski and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles. New Tab , opens new tab

World Chevron

Australia boosts funds to Taiwan-ally Tuvalu amid Pacific contest for influence with China

Australia will quadruple its financial assistance to Tuvalu, a Pacific Island nation at risk from rising seas, to cement a landmark climate migration and security deal as China also courts small island states.

Jan 02, 2020

310 likes | 454 Views

UK Economy. Focal points. ★ Absolute decline and relative decline ★ Recent history ★ The current UK economy. Absolute Decline and Relative Decline. 1.Absolute decline By the 1880s, the British economy was dominant in the world, producing one third of the world’s

Share Presentation

• manufacturing industry
• service sector
• manufacturing industry accounted
• 6th major tourist destination

Presentation Transcript

Focal points ★ Absolute decline and relative decline ★ Recent history ★ The current UK economy

Absolute Decline and Relative Decline 1.Absolute decline By the 1880s, the British economy was dominant in the world, producing one third of the world’s manufactured goods, half of its coal and iron and half of its cotton.—the workshop of the world 2. But by 1900, the UK has been overtaken by both the US and Germany. 3. The Second Industrial Revolution in the US meant the US had begun to challenge Britain’s role as the leader of the global economy.

★ The extensive war effects of both World Wars in the 20th century and the dismantlement of the British Empire also weakened the UK economy in global terms, and by that time Britain had been superseded by the US as the chief player in the global economy. ★ From 1945 to the present, the story of the UK economy is usually thought of as one of decline.

The reasons for decline of the UK economy First, World War Ⅱ made the UK go heavily into debt in order to finance the war, and after that it had to sell many of its accumulated overseas assets, and borrow large amounts of money from the US and Canada.

Second, the era of British empire was over, the independence of its colonies makes Britain lose big markets for British goods, and the independent colonies stopped providing raw materials to the UK, leaving Britain as just a medium-size European country.

Third, Britain spent a higher proportion of national wealth on the military presence in many overseas locations than most of its competitors. Fourth, its industry survived almost unaffected during the war so that Britain continued with its older factories and pre-war products.

Fifth, the lack of a close relationship between industry and banks. Banks and industry in the UK are not as close as that of Japan and Germany, and the rates of investment were low.

Relative Decline What does relative decline mean? ★ Britain is not poorer or producing less than it was in 1945, but a lot wealthier and more productive than it was then.

★ though it has improved, other countries have improved more rapidly. Even many smaller economies have overtaken the UK in terms of output per head of population, and the UK slide from being the 2nd largest economies (after the US) to being the 6th at present. • ★ So the UK has experienced economic decline, but this decline is relative to some other economies rather than absolute.

Rank of Major Economies in 2013 in terms of GDP

Recent History The evolution of the British economy since WWⅡ ★ Steady development in the 50s and 60s: The British economy in this periods characterized by slow but steady growth, low unemployment and great material property with rising standards of consumption

★ Economic recession in the 70s: • The British economy went through a particular bad period in the 1970s. Following the severe shock of the 1973 oil crisis and the 1973-74 stock market crash, the British economy went into recession in 1974.

In the 1970s among the developed countries, Britain maintained the lowest growth rate and the highest inflation rate (25%) and the high record of trade deficits. ☆ Results: ＊ Workers struck for more pay. ＊ The government was in debt. ＊ The British industry appeared to be doing badly, with increasing imports relative to exports. ＊ Value of the British currency fell.

☆Solution: a change of government • In 1979, the British people voted in the Conservative Party under the Margaret Thatcher, with the promise of a radical program of reform. (privatization)

Results of Reform ★ Positive consequences: ☆ The inflation was under control. ☆ Companies were more efficient, being able to pay higher wages and make higher profits. ★ Negative consequences: ☆ A rapid increase in unemployment. ☆ The public services became worse. However, the national economy as a whole continued to grow at lower rates than its competitors.

★ Economic recovery in the 80s: An outstanding feature of the economic recovery in the 80s was its length, lasting seven years. Another was the improved financial position of the government, with stronger current account of the balance of payments.

A General Picture of the UK Economy ★ Primary industries: agriculture, fishing and mining. ★ Secondary industries: manufacturing ★ Tertiary industries: services, such as banking, insurance, tourism and the selling of goods.

★ Steady growth in the 90s and the beginning of the 21st century: • Britain is growing at higher rates and has the lowest unemployment in the EU. Inflation has remained under control at very low levels and investment has increased.

Primary Industry ★ Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with less than 2% of the labor force, it contributes about 2% of GDP. The best agricultural area is located in the southeast of England.

★ Around 2/3 of the production is devoted to livestock, 1/3 to arable crops. • ★¾ of Britain's land is used for agriculture, with about ¼ of that under crops, and the rest is grazing for animals. • ★ The fishing industry provides 55% of the UK demand for fish. Scottish ports provide the majority of the fish caught.

★ Energy production accounts for 5% of the national wealth. The abundance of energy resources make the UK become an overall exporter of energy. ☆ 3 of 10 biggest companies in Britain are in the energy sector: Shell (壳牌石油) British Petroleum (英国石油公司) British Gas (英国天然气公司) ☆ North Sea oil and gas supply most of the UK’s needs of energy.

Second Industry ★ Secondary industries manufacture complex goods from those primary products. ★ In 2003, manufacturing industry accounted for 16% of national output in the UK and for 13% of employment, according to the Office for National Statistics. ★ This is a continuation of the steady decline in the importance of this sector to the British economy since the 1960s, although the sector is still important for overseas trade, accounting for 83% of exports in 2003.

★ Britain's companies are active in all major fields of manufacturing industry, but are particular strong in pharmaceuticals, chemicals, aerospace, and food and drink, steel, electronics industry and the car industry.

Tertiary Industry ★ The importance of secondary industry has shrunk, while the importance of service industry grows. ★ 70% of the UK’s workforce are employed in the service sector. The UK service sector now makes up about 73% of GDP/ ★ The service sector is dominated by financial services, especially in banking and insurance. ★ London is the world’s largest financial center with the London Stock Exchange, the London International Financial Futures and Options Exchange and the LIoyd’s of London insurance market all based in the City of London.

★ London has the largest concentration of foreign bank branches in the world, with HSBC and Barclays Bank relocating their head offices there.

The Central Bank of the UK

★ Tourism is very important to the British economy. With over 27 million tourists arriving in 2004, the UK is ranked as the 6th major tourist destination in the world. ☆ London is the most visited city in the world with 15.6 million visitors in 2006, ahead of the 2nd placed Bangkok and the 3rd placed Paris.

The UK Economy in 2009 ★ The UK entered a recession in the 2008. at the end of September 2009, the country had shrunk by 5.9%, making the 2008-2009 recession the longest since records began. ★ There was a 2.4% decline in the first quarter of 2009. GDP decreased by 0.4% in the 3rd quarter of 2009, after a decrease of 0.6% in the 2nd quarter, according to the October 2009 figures from the Office for National Statistics.

By the end of 2009, the UK economy is expected to have contracted 3.2% with the UK budget deficit ballooning 11.3% of GDP, from 5.3%, and British national public debt expanding to 59% of GDP. ★ Inflation is no longer a concern thanks to the collapse in energy and commodity prices. ★ It is expected to be around 0.5% in 2000. indeed many argue that deflation is now a bigger concern. As such, the Bank of England is expected to cut Interest Rates.

• More by User

UK Economy In Charts

UK Economy In Charts Geoff Riley Tutor2u January 2009 The next set of GDP data will confirm recession BCC Confidence Survey hits rock bottom … for now A weaker global economy is hitting the export sector And the labour market is now suffering a severe ‘labour shake-out’

914 views • 34 slides

Revision on the UK Economy

Revision on the UK Economy. AS and A2 Economics May 2009. Recession - causation. Global credit crisis Asset price deflation Rising food and oil prices Cuts in real disposable income Collapse of consumer and business sentiment De-globalisation Falling profits, investment Labour shedding

539 views • 40 slides

The UK Economy

The UK Economy. Relative Decline. The UK economy is currently moderately successful, but is more interesting when compared with the dominance it had over the world in the 1800s .

381 views • 12 slides

Low Interest Rates and the UK Economy

Low Interest Rates and the UK Economy. AS Macro – Spring 2014. Limits to the Effects of A Cut in Nominal Interest Rates. Some of the Recent Changes to UK Monetary Policy. There have been a number of important changes in the handling of monetary policy by the Bank of England in recent years.

155 views • 7 slides

Introduction to the UK Economy

Introduction to the UK Economy. How big is the UK economy ?. The UK economy is the 7 th largest in the world, with an annual GDP of around £1.35 trillion, or £1350 billion, or £1,350,000,000,000.

273 views • 8 slides

Government and the UK Economy

Government and the UK Economy. OCR GCSE A293. Starter: Think of three words that you would use when talking about the UK economy Hopefully by the end of this lesson you will have lots more! Be prepared to share them at the end.

379 views • 24 slides

Steering the UK economy through global turbulence

Steering the UK economy through global turbulence. Professor Andrew Sentance Warwick Business School and Former Member, Bank of England MPC WBS Special Lecture – Tuesday 25 October 2011. UK business cycle expansions . The five longest business cycle expansions since the mid-19 th century.

488 views • 38 slides

The UK Economy in a global context

Poverty and inequality. Globalisation. FDI. Constraints to development. Liberalisation. Development strategies. Protectionism. Policy objectives and policies. The UK Economy in a global context. Global shocks. Integration. WTO. Inflation. Competitiveness. Unemployment.

2.75k views • 261 slides

UK Economy In Charts. Geoff Riley Tutor2u January 2009. The next set of GDP data will confirm recession . BCC Confidence Survey hits rock bottom … for now. A weaker global economy is hitting the export sector. And the labour market is now suffering a severe ‘labour shake-out’.

436 views • 34 slides

How healthy is UK economy?

How healthy is UK economy?. UK unemployment rate: 7.8%. Trade Unions . The impact of union intervention on the labour market. Effects of trade union representation wage bargaining . Wage. S tu. S. W tu. W e. D. Quantity of labour. Q 1. Q e. Q 3.

248 views • 16 slides

UK Economy. What we are going to talk about. Primary Sector Secondary Sector Tertiary Sector Import & Export Finance & Currency. Introduction. Sixth-largest national economy in the world and the third-largest in Europe after Germany and France

541 views • 13 slides

The UK Economy. 3.1.2- Economy and Welfare Systems. Starter… Un-jumble. XAT TINDERIC DTICRE EESICX CNOORIPTOAR RDOA TAV. CAN YOU DEFINE THEM TOO?. The National Economy. Define: …………………………………………………………………………. The Government. Chancellor of the Exchequer: ………………………………………………………………………….

537 views • 35 slides

The outlook for the UK economy

The outlook for recruitment David O’Brien, 0151 600 3707, [email protected] 23rd March 2013. The outlook for the UK economy. Slow recovery beginning to feed through , GDP forecast raised from 1.2% to 1.5% for 2013 by the BoE

356 views • 21 slides

UK Economy: Where do we go from here?

UK Economy: Where do we go from here?. Robert Gardner, Head of Macroeconomics. What to expect in the next 30 mins:. Taking stock: A simple framework for thinking about the future Where we are and where we are heading (......probably) What does it mean for businesses?

363 views • 27 slides

Economy of the UK

Economy of the UK. Falling but still strong. UK economy: An introduction (1). The United Kingdom has the fifth largest economy in the world in terms of market exchange rates and the sixth largest by purchasing power parity (PPP). It has the second largest economy in Europe after Germany.

4.66k views • 27 slides

UK economy and business environment

UK economy and business environment. Simon Sweeney Head of Programme MA International Studies 5 December 2007. History Economic structure Business culture. Background. Early industrialisation Empire Global presence 20 th Century decline Post-war decolonisation 1950s prosperity.

442 views • 12 slides

London and the UK Economy

London and the UK Economy. Duncan Melville Senior Economist, GLA Economics. What is GLA Economics?. GLA Economics provides expert advice and analysis on London's economy and the economic issues facing the capital.

586 views • 37 slides

Supply-side Indicators for the UK Economy

Supply-side Indicators for the UK Economy. Tutor2u Economics February 2009. Key supply side concepts. Aggregate supply Incentives for people and businesses Productivity The economy’s productive potential Capital Investment Research and development Product and Process Innovation

354 views • 21 slides

Rebalancing the UK economy: results and prospects

Rebalancing the UK economy: results and prospects. John Tomaney Bartlett School of Planning University College London, Based on research being conducted jointly with Andy Pike and Anja McCarthy at Centre for Urban and Regional Development Studies, Newcastle University. Outline.

263 views • 18 slides

Outlook for the UK Economy: Returning to normality...

18 th January 2011. Outlook for the UK Economy: Returning to normality. Tom Vosa Head of Market Economics, Europe, Wholesale Banking National Australia Bank, [email protected]. Global macro outlook. 2. IMF and NAB forecasts still for solid global growth. Source: IMF WEO.

807 views • 65 slides

Uk economy comparison

Uk economy comparison. Labour force – by occupation (%). Government spending. Policy Instruments. Policy Goals. Policy Targets. Stable prices High employment Sustained growth Rising living standards Reduction in poverty Higher productivity. Monetary Policy Fiscal Policy

288 views • 14 slides

Power Point Show To accompany printable notes (available separately). Development theories. Globalisation. FDI. Constraints to development. Liberalisation. Development strategies. The UK Economy in a global context. Protectionism. Policy objectives and policies. Global shocks.

3.15k views • 283 slides

Press release

Uk economy’s growth to accelerate in 2025 as barriers fall, says ey, the ey item club spring 2024 forecast sets out predictions for uk gdp, consumer spending, inflation, business investment, and more..

Manager, Media Relations, Ernst & Young LLP

Experienced communications and media relations professional. Dad of one and a reluctant Arsenal fan.

• Link copied
• The EY ITEM Club Spring Forecast expects the UK economy to grow 0.7% in 2024, downgraded slightly from the 0.9% projected in January’s Winter Forecast
• However, GDP growth expectations for 2025 have been upgraded from 1.8% to 2%
• Inflation is forecast to fall below 2% in H2 2024 due to lower wholesale energy prices and slower increases in food and goods prices
• Bank Rate is now expected to fall 75bps in 2024 to 4.50%

While the UK’s economic outlook is expected to remain modest this year, growth is predicted to build throughout 2024 before accelerating in 2025 thanks to falling inflation, higher consumer spending and anticipated reductions in interest rates, according to the new  EY ITEM Club Spring Forecast.

Show resources

Ey item club spring forecast - april 2024.

The EY ITEM Club now expects GDP growth of 2% in 2025, up from 1.8% in January’s Winter Forecast .  However, the growth forecast for 2024 from EY ITEM Club has been downgraded from 0.9% to 0.7% as the lagged effects of the 2023 technical recession continue to be felt this year. 

While it is uncertain whether Consumer Price Index (CPI) inflation will decline to the Bank of England’s 2% benchmark in April due to sticky services inflation, the EY ITEM Club expects it to do so by the second half of 2024, thanks to falling prices of wholesale energy, as well as slowing inflation of food and goods prices. The EY ITEM Club then expects inflation to average just below 2% for the rest of the year.

However, despite an improving inflationary outlook, the EY ITEM Club now expects Bank Rate to end 2024 at 4.50% following 75 basis points (bps) of cuts across the remainder of this year – a less significant reduction compared to the 125bps of cuts predicted in January’s Winter Forecast. Since January’s forecast, the Monetary Policy Committee’s (MPC) messaging has suggested that rates may need to stay high for longer. The EY ITEM Club now anticipates that the first rate cut will come in June 2024, amid expectations of a period of below-target inflation.

Hywel Ball , EY UK Chair, comments: “Although growth in 2024 is forecast to remain subdued, we still expect this year to mark a turning point for the UK economy and provide a launchpad for a far brighter 2025. High inflation, energy prices and interest rates have mired the UK in economic stagnation in recent years but all three obstacles to growth have now either fallen away already or are expected to diminish in 2024. 

“Business investment is predicted to see modest growth this year before accelerating in 2025. Rising business confidence and spending, alongside improved economic conditions, should set the stage for a welcome return to growth in the near future.”

Consumer spending and house price growth expected in 2024

The EY ITEM Club Spring Forecast brings welcome news for homeowners, with house prices predicted to grow by 1.3% this year . Property prices are then forecast to increase by a further 2% in 2025. The recent fall in mortgage rates has put a floor under prices, which have shown more resilience than expected at the start of 2024. The EY ITEM Club therefore expects an improving economy to drive a steady recovery in house prices this year and in 2025.

In line with expectations for GDP, growth predictions for consumer spending in 2024 have been downgraded from 0.9% to 0.7% due to a weaker-than-expected end to 2023. However, 2025 is forecast to see more substantial growth of 2.2% with the anticipated fall in interest rates likely to prompt households to borrow more and save less.

According to the Spring Forecast, the unemployment rate is expected to edge up slightly due to the lagged effect of a weaker-than-expected end to 2023 on business hiring decisions. However, as the economy begins to recover, unemployment should remain low by historic standards.

Peter Arnold , EY UK Chief Economist, comments: “The UK may have slipped into a mild technical recession at the end of 2023, but there are still indications that the UK’s extended period of economic stagnation has already started to draw to a close. Falling inflation and interest rates, alongside tax cuts, should help unlock growth in consumer spending, house prices and real incomes. While 2024 isn’t expected to be a year of enormous economic momentum, it should provide a stepping stone to a far brighter 2025.

“The UK’s performance so far this year suggests that stagnation is lifting, with activity surveys signalling a return to growth across various sectors and improved consumer confidence. The Bank of England’s next set of forecasts in May should show a period of below-target inflation and we believe that Bank Rate cuts could follow as early as June, with a total of up to 75 basis points of cuts this year. As well as alleviating some of the financial pressures on households, this should also create a more positive environment for business investment.”

Challenges persist for business investment, but longer-term outlook is improving

According to the EY ITEM Club Spring Forecast , prospects for business investment in 2024 are on an upward trajectory. Growth of 0.6% is now expected in 2024, which represents a significant improvement on expectations of a 1% decline in January’s Winter Forecast. However, the fact that interest rates currently remain high is expected to limit the potential scope of growth this year.

Meanwhile, the EY ITEM Club continues to expect 3.2% growth in business investment in 2025. The anticipated cuts to the Bank Rate are expected to reduce existing business debt costs, while encouraging more investment activity going forward.

Risks to the forecast

The most significant risk to the EY ITEM Club Spring Forecast is the potential effect of ongoing geopolitical tensions, which may push up energy prices. In this scenario, inflation may remain elevated, which could in turn have a marked knock-on effect on interest rates, GDP expectations and household spending power. Furthermore, while the EY ITEM Club expects the Bank of England to cut rates in 2024, there is no guarantee on the timing and extent of these reductions. Finally, an impending general election means the future path of government fiscal policy isn’t clear beyond 2025, which presents a significant unknown for longer-term forecasting.

Related news

Legal and privacy

Modern slavery statement

Connect with us

Our locations

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

EY | Assurance | Consulting | Strategy and Transactions | Tax

EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

© 2020 EYGM Limited. All Rights Reserved.

EYG/OC/FEA no.

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

Welcome to EY.com

In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services:  Functional cookies  to enhance your experience (e.g. remember settings),  Performance cookies  to measure the website's performance and improve your experience,  Advertising/Targeting cookies , which are set by third parties with whom we execute advertising campaigns and allow us to provide you with advertisements relevant to you,   Social media cookies , which allow you to share the content on this website on social media like Facebook and Twitter.

You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.

Review our  cookie policy  for more information.

Customize cookies

I decline optional cookies

• International edition
• Australia edition
• Europe edition

UK will be worst performer in G7 next year, OECD forecasts

UK constrained by high interest rates, price rises and staff shortages but thinktank offers optimistic outlook for global economy

The UK will be the worst-performing economy in the G7 next year, according to the Organisation for Economic Cooperation and Development, as high interest rates and the lingering effects of last year’s surge in inflation drag on growth.

In a downbeat assessment, the Paris-based thinktank also downgraded its forecast for UK growth this year to 0.4% from a November forecast of 0.7%.

The UK will fall to the bottom of the G7 growth league in 2025, the OECD predicts, with growth of 1%, just behind Germany at 1.1%. US and Canada are forecast to be the fastest growing economies the G7 next year, both growing 1.8%.

The OECD said Britain’s growth rate would be dampened by persistent price rises in the services sector and shortages of skilled staff that will push back expected cuts in interest rates.

The thinktank expects the Bank of England to delay the first cut in interest rates from 5.25% until the autumn after fears that prices growth could rebound.

The assessment followed a more optimistic outlook for the global economy, which the OECD said was gaining in strength despite the threat of worsening conflicts in Ukraine and the Middle East.

“There are some signs that the global outlook has started to brighten, even though growth remains modest,” it said in a half-yearly health check.

Global GDP growth is projected to be 3.1% in 2024, unchanged from 2023, before edging up at 3.2% in 2025 helped by stronger growth in household incomes and lower interest rates.

IGrowth rates in France and Germany were also downgraded while the US economy has accelerated according to the OECD.

Germany was expected to grow by 0.2% this year, down from last year’s forecast of 0.6%, while France is expected to grow by 0.7%, down from the 0.8% predicted last November.

A recovery is expected in the eurozone while growth moderates in the US, India and other emerging-market economies.

Annual consumer price inflation in the G20 economies – which includes the UK, Brazil, Saudi Arabia, France and Mexico – is projected to ease gradually, helped by fading cost pressures, declining to 3.6% in 2025 from 5.9% in 2024.

“By the end of 2025, inflation is projected to be back on target in most major economies,” the report said.

Governments representing much of the world’s output are expected to keep a tight rein on spending, even as interest rates begin to decline, allowing the effect of cheaper money rather than public spending to ease the cost of living crisis facing many low- and middle-income groups.

In a warning to the UK government, the OECD said the chancellor, Jeremy Hunt, “should remain prudent and focus on productivity-enhancing public investment”.

Any loosening of the public purse strings should happen only after interest rates have fallen back, it said, predicting that the Bank of England will reduce the cost of borrowing from 5.25% to 3.75% by the end of next year.

“Fiscal prudence is required as inflation remains above target, and spending is to be directed towards supply enhancing investment, including infrastructure, the National Health Service, and adult skills,” the report said.

“Proceeding with the childcare reform will help tackle economic inactivity, but requires contingent planning to address potential bottlenecks, in particular likely staff shortages.”

Cuts to Whitehall budgets already in the pipeline would reduce the government’s spending deficit from 4.6% this year to 3.5% next year, it added.

Hunt said: “This forecast is not particularly surprising given our priority for the last year has been to tackle inflation with higher interest rates.

“But now we are winning that war, growth matters which is why it is significant that last month the IMF predicted the UK will grow faster over the next six years than any European G7 country or Japan. To sustain that we need to stick to our plan – competitive taxes, a flexible labour market and far-reaching welfare reform.”

A bounce back in GDP during 2025 of 1% would be half that projected by the Treasury’s independent forecaster, the Office for Budget Responsibility (OBR).

The OBR has forecast that the UK’s growth rate will rise to 1.9% next year after a steep fall in interest rates and inflation.

• Economic growth (GDP)
• Economic policy
• Economic recovery
• Global economy

More on this story

OECD forecasts will be blow to Sunak’s claims UK economy is improving

UK takes another step on path out of recession as GDP rises

Blow for Sunak as revised figures confirm UK went into recession last year

Why UK recession may be deeper than two quarters of falling GDP suggest

Better moment for UK economy likely to come too late for Rishi Sunak

Hopes of UK exit from recession boosted as GDP rises in January

Britain is in a rut. Here are five ways to fix the economy

UK tips into recession in blow to Rishi Sunak

Most viewed.