MACRO ECONOMICS

Macro Economics

Macro Economics

Introduction

The GDP is one of the most important measures of the economic activity of a country. It is usually published annually but this period can vary from country to country. In the UK, it is published quarterly. A rise in the GDP suggests that the economy is growing while a decline suggests that opposite. Currently, just like the rest of the world, the GDP of UK is facing a crises but it is widely expected that it will rise in coming years due to strong long-term measures taken by the current government (Grice, 2013).

Discussion

According to former British Foreign Secretary, David Milliband, the UK economy is currently facing a tough condition in the short run while the prospects for a favourable economy in the long run are very strong (Al Makahleh, 2013).

Recently, the UK lost its AAA grading; however, this grading scale does not reflect the true nature of the economy as the rating companies do not give a true representation of the economy. With the estimated GDP rate always being lowered and raised, it is evident that the UK economy lacks stability and it currently flat (Al Makahleh, 2013).

Globalization

Over the past 10 years, globalization has had a major impact on the economy of several countries especially the European Union. For example, the economic boom of China has led t a worldwide decline in manufacturing as goods are now being imported from China worldwide. The output of the United Kingdom has also been affected and is current below its maximum point sustained in previous years. Currently, the output index is at 93 compared to 95 which shows a downward trend. However, there have been some positive points about globalization, as the country is able to offer affordable good to its people despite the financial crunch (Al Makahleh, 2013).

The confidence index was 90.6 in February but rose to 92.2 in March along with an increase in the hiring gauge from 95 to 96 showing signs of an improving economy. The economic decline in the third quarter could not be reverted back in the fourth quarter as the industrial growth rose by a mere .01% in the period January-March. One of the main reasons for the decline in industrial production was due to the shutdown of the North Sea and the slump in manufacturing (O'Brien, 2013). When this is considered along with the rise in population due to immigration, the true cause of the problem becomes evident.

GDP

BDO claimed that this difficult condition will last till the mid of the year due to a weak demand from the main UK euro-zone market. This is contrary to what was claimed last year. In May 2012, the GDP was expected to grow by 0.6% but this was adjusted in 2012 to -0.3% in August. This shows that the period between May 2012 and August 2012 was critical as it led to a downward trend in the GDP (O'Brien, 2013). The same period this year is expected to be the similar but after this ...