UKs Economic Performance - Report Example

UK’s Economic Performance number/ assignment number] Evaluate the UKs economic performance in recent decades from both an historical and international perspective. Economic performance denotes the aggregate impact of various economic factors such as growth rates, level of unemployment and GDP (Alonso, Keane and Merkel, 2011). Improving economic performance is the aim of every country since it has widespread and multifaceted effects on employment rates, standards of living and the national income. UK’s economy has undergone significant changes over the past few decades. This paper will look into the economic performance of the country from a historical and international point of view. Economic performance can be measured by a variety of measures, which can be grouped into economic and non-economic methods. Economic measures include inflation, unemployment and growth amongst others whereas non-economic ways of measuring economic performance include quality of life, health and education. UK’s economic growth and overall performance will be analyzed using these measures. GDP is representative of the national income and gives an insight into the economic growth of the country. It encompasses any fluctuations in the value of goods and services produced by a country and so determine the strength of the economy. The increase in the economic performance of UK has largely been constant, although not remarkable. In fact, during the period 1986-2006, growth was consistent, without any negative growth trend emerging. According to BBC News (2007), economic growth in UK has been bolstered by the strength of the world economy and increase in immigration and public expenditure. From a historical perspective, the GDP of UK grew at an average rate of 0.58% per quarter in the years from 1955 to 2011. It reached its peak in early 1973 and touched an all-time high of 5.3%. This was followed a few months later by the lowest quarterly GDP the country had seen- -2.5%. The annual GDP growth in these years occurred at a rate of 2.33%. Highest growth rate was recorded in 1973, totalling to a significant 10.1%. The lowest growth rate was -5.9%, seen in mid of 2009 (Trading Economics, 2012). This data depicts that the growth rate of the country has risen. Unemployment rates in UK have largely decreased in the past century. The period between the two world wars saw an unemployment rate of 9.6%. A decade later, after the Second World War, this fell down to 1.8%. However, it increased after 1973, maintaining an average of 7.3% (Dow, 2000). This dip in the employment rate was caused by recessions, bringing down the employment rate more compared to other countries. 1932 had seen a record high unemployment rate of more than 22% (Hicks and Allen, 1999). However it was in 1986 that the maximum number of people did not have employment; these people accounted for more than one-tenth of the population (Hicks and Allen, 1999). It must also be noted that people who were employed constituted a large proportion of skilled professionals with senior leadership positions. There were also changes in the distribution of employment, particularly after the Second World War. When analyzing the position of UK from an international perspective, one can assimilate that other countries also showed high rates of unemployment after World War II. This was particularly the case for France, Germany and Japan. The increase in unemployment rate had more importance and was more consequential and unremitting for UK than for other countries. Nevertheless, the end of the twentieth century saw a decrease in the rates for most countries including UK (Floud and Johnson, 2004). More so, UK did not merely improve its employment rate. Compared to France and Germany, it was able to significantly bring down its unemployment rates, whereas the two nations maintained relatively higher rates. This can be attributed to a slight increase in wages, the fall in the authority of trade unions and increased flexibility of the market for workforce amongst others (Floud and Johnson, 2004). The economy of UK is growing fast and is currently rated as the 6th largest economy of the world. From an international perspective, the economic performance of UK has become better compared to countries such as the US, France and Germany. According to the UE KLEMS, when comparing the output and the rise in employment rates of UK with US etc, UK has been doing much better. This represents that its economic performance has improved after the Second World War and has broken away from the post-war recession. Economic growth has been due to a number of factors, particularly the growth in the information and technology field (OMahony and Robinson, 2007). A non-economic measure of economic performance is health. Health has improved in the UK after the Second World War with the formation of the National Health System. The previous decade has shown significant reductions in the mortality rate and cancer incidence and an increase in life expectancies. Another aspect of measuring economic performance is the balance of payments, which for UK has shown that its GDP compromises a larger portion of its assets and liabilities compared to other countries like US. Moreover, the fact that UK’s BOP is heavily influenced and sustained by consumer spending, it has not been able to improve or maintain a steady level. This is because consumers prefer to opt for cheaper goods and services being provided by foreign suppliers (BBC News, 2007). Consequently, the balance of payments dipped to approximately -5% in the late 1980s. It increased in the late 1990s and reached almost to zero. However, for more than two decades, from 1985 onwards, the balance of payments of UK has remained in negative (BBC News, 2007). In contrast to that, US showed a cyclical trend in its balance of payments. It was measured is surpluses at times when the country was in recession. It also increased in the end of the twentieth century, where it became greater than other advanced economies. This led to the inflow of capitals into the country (Kandil and Greene, 2002). Thus, UK’s economy has generally improved over the past decades. From both a historical and international perspective, its GDP has increased. However employment rates and balance of payments have risen and declined without following any particular pattern with respect to UK’s competitors. Reference List Alonso, S., Keane, J. and Merkel, W., 2011. The Future of Representative Democracy. Cambridge University Press. BBC News, 2007. In Graphics: Brown’s Britain. [online]. Available at: [Accessed March 29, 2012]. Dow, C., 2000. Major Recessions: Britain and the World, 1920-1995. Oxford: Oxford University Press. Floud, R. and Johnson, P. A., 2004. The Cambridge Economic History of Modern Britain, Volume 3. Cambridge: Cambridge University Press. Hicks, J. and Allen, G., 1999. A Century of Change: Trends in UK statistics since 1900. House of Commons Library. Kandil, M. and Greene, J. E., 2002. The Impact of Cyclical Factors on the U.S. Balance of Payments, Issues 2002-2045. International Monetary Fund. Treasurers Dept. OMahony, M. and Robinson, C., 2007. UK Growth and productivity in an international perspective: Evidence from EU KLEMS. National Institute Economic Review, 200 (1), pp. 79-86. Trading Economics, 2012. United Kingdom GDP Annual Growth Rate. [online]. Available at: [Accessed March 29, 2012]. Read More