How will the current UK economy affect my business?

The UK economy has recently emerged from a severe recession, caused by the credit crunch which began in August 2007 and the subsequent impact on the global banking system. This was a slightly different cause of a recession than one would normally expect and thus the scale and type of policies to deal with it were unusual.

It is critically important for businesses to have an understanding of the forces driving the UK economy and what that means for interest rates. With this in mind we think it involves an understanding of the current state of the UK economy in detail, the ability to analyse the differing components of aggregate demand and the various external factors impacting the UK. Businesses also need to be able to consider the outlook for inflation, analyse the likely path of interest rates and identify the principal risks facing the UK in the recovery.

The UK economy grew by 0.5% in the first quarter of 2011, after falling by the same amount in the fourth quarter of the previous year, while inflation remains (seemingly) resolutely above target at 4.5%. Indeed, the bank of England has missed the inflation target more than 30 times in the last four years. However, unemployment has fallen by 0.3% over the last three months, making it the largest quarterly fall in unemployment since the three months to August 2000. The UK has also seen a drop in unemployment levels over the last 12 months.

Consumer confidence has been falling recently yet there was a slight upturn in April. House prices in some parts of the economy are stagnant or falling while in some parts of London they‘re rising. Some of the proposed government spending cuts are being changed and re-assessed.

These are signs of an economy in the early stages of recovery with seemingly confusing signals. It is important to consider the state of aggregate demand and the drivers behind it, i.e., consumer spending, investment spending, government spending and net trade.

If you have an interest in economics or finance and want to understand more about the backdrop to our current position, and the current state of the UK and also examine whether the world economy has changed, then there are several courses you could choose from, including Economic Development and The New Localism Agenda and Understanding Development Economics Conference.