Final dates! Join the tutor2u subject teams in London for a day of exam technique and revision at the cinema. Learn more

Topic updates

Is cyclical unemployment starting to rise in the UK economy?

Geoff Riley

19th December 2022

Students need to have a clear understanding of the different types and causes of unemployment. Cyclical (or demand-deficient) unemployment is one of them. In this short revision video, we look at how to model cyclical unemployment using an AD-AS diagram and then look at some data which suggests the UK labour market is weakening as 2022 comes to a close.

Is cyclical unemployment starting to rise in the UK economy?

Cyclical unemployment is involuntary unemployment due to a lack of aggregate demand for goods and services. This is also known as Keynesian unemployment or demand-deficient unemployment.

Is cyclical unemployment likely to rise in the UK in 2023?

  • The UK economy is expected to experience a long, shallow recession that might last two years – real GDP is forecast to drop 2% in 2023.
  • Household real incomes - once rising prices are considered – are expected to drop by 7% in the next few years.
  • This will lead to a decline in real consumer spending
  • Falling AD will cause many firms to scale back job hiring, and many businesses will make redundancies to control their costs
  • The UK unemployment rate is forecast to climb - perhaps reaching 5.5% in 2024, an increase of around 600,000 people.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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