In the News Teaching Activity – what does the latest data tell us about the state of the UK macroeconomy? (Apr 2024)

For students heading into exams, it is always good to know the latest information about growth, unemployment and inflation. All three indicators were updated by the ONS last week.

Many economic commentators had played down the technical recession the UK had last year because they felt it indicated flat growth rather than a significant period of recession and the latest GDP data suggests this was wise. February’s growth rate was positive at 0.1%, following 0.3% growth in January. Meanwhile the jobs market data are less encouraging – unemployment has edged up to 4.2% for Dec-Feb meaning 1.4 million people are now out of work; economic inactivity also increased, but wage growth slowed marginally to 6%. The labour market seems to be loosening, pointing to the possibility of an imminent cut in interest rates, but this also depends greatly on the inflation outlook. CPI inflation came down to 3.2% in March, getting ever closer to the 2% +/- 1% point range. It is expected to continue to trend downwards. Watch out for the Bank of England’s next bank base rate decision on 9th May – will there be a cut?

GDP: Economy grew in February increasing hopes UK is out of recession - BBC News

Unemployment jumps as UK jobs market stalls - BBC News

UK inflation falls as some food prices drop - BBC News

1 Define the following terms: Growth, recession, unemployment, economic inactivity, CPI inflation, Bank base rate

2 Using the data and economic theory, analyse why there may be a trade-off between inflation and unemployment.

3 Discuss the factors considered by the Bank of England when it makes its decisions about monetary policy.