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UK Economy - New Revision Videos on Growth and Monetary Policy

Geoff Riley

25th April 2023

We've added a couple of topical new videos to our collection on the UK economy available on our YouTube channel. One asks why economic growth in the UK is so slow. The other questions whether higher interest rates will work in controlling inflation.

The UK is suffering from slow economic growth. This revision video looks at a range of short- and medium-term explanations.

UK Economy - Why is the UK a slow-growth economy?

This revision video looks at the recent increases in UK interest rates and their impact on the UK economy. The Bank of England has raised policy interest rates from 0.1% to 4.25% and they may move higher still. But do higher interest rates actually do much to help bring inflation down? What are the risks for the UK of a period of more expensive credit for households and businesses?

UK Economy - Do Higher Interest Rates Control Inflation?

Update figures on government borrowing

Borrowing remains high, with £21.5 billion borrowed in March and total borrowing for the year reaching £139.2bn, the 4th highest since records began in 1946.

One of the biggest factors driving this has been the fact that spending on providing energy support hasn't been matched by higher tax revenues. All in all, as the article notes "public sector net debt at the end of March 2023 was £2.53 trillion - equivalent to around 99.6% of the value of the whole UK economy", a level not seen since the early 1960s. You might want to think about what, if any, the macroeconomic implications of this are, and how the Chancellor is going to reduce debt as a proportion of GDP within the next 5 years.

Please read: UK government borrowed less than expected last year

The Guardian spell out the options open to the Chancellor in the wake of today's data regarding the public finances, and the level of the government borrowing.

The key dilemma that he faces is the extent to which the current state of play and the need to reduce the debt: GDP ratio might reduce his ability to reduce taxes in the run-up to the next election. The prevailing wisdom is that the fact that borrowing is £13bn lower than expected implies that there's a little bit of room for tax cuts, but that in the aftermath of the election there's also going to be a need for fiscal tightening.

Please read: Record UK borrowing puts Jeremy Hunt in a tax cut dilemma

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.

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