The UK Economy: Macroeconomics

Since the financial crisis in 2008, the global economic dynamics have attracted more attention from the public. The public have gradually realised that the varied kinds of economic indicators are relevant to people’s daily life through the crisis. This essay will evaluate three basic economic variables in the United Kingdom during the last decade, including unemployment, private and public debt as well as explain the significant role of private and public debt played in the financial crisis. The situation of these variables after 2009 will also be analysed before the conclusion is made.

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Unemployment rate is one of the most reflective indicators of economic situation. Tackling unemployment is a crucial objective of any government as the costs of unemployment are not only to the unemployed themselves but also to the society at large (Lec 2). The following graph (Graph 1) shows the unemployment rates in the UK from 2002 to 2013.

According to the Graph 1 above, the unemployment in the UK has a general rising trend from 2004 to 2013. Before 2008, the unemployment is relative stable and fluctuates at a normal range due to varied causes, mainly including cyclical unemployment, structural unemployment, frictional unemployment and seasonal unemployment (politics.co.uk, no date). However, the unemployment increased dramatically since the financial crisis in 2008 and reached the highest position in late 2011. Moreover, Bell and Blanchflower’s paper (2011) pointed out that the unemployment increases had been particularly concentrated on young people in the UK, so this indicated that the youth unemployment is an extremely outstanding issue in the UK’s labour market. From early 2012, the unemployment started to slightly fall and this may owe to the slow recovery of the world economy.