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Overview

Overview
1.1 Introduction
1.2 Political Background
1.3 Conservative Government 1959-64
1.4 Labour Government 1964-70
1.5 Conservative Government 1970-74
1.6 Labour Government 1974-79
1.7 Conservative Government 1979-97
1.8 Labour Government 1997 -

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Models and Forecasting

Overview
2.1 Models
2.2 Econometrics
2.3 Forecasting
2.4 Mini Macroeconomic Model - Experian Business Strategies
Experian UK Model (Excel 2000 or greater)
User Notes for Experian UK Model
Download Experian UK Model as a spreadsheet
User Guide for spreadsheet

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Current Economic Situation

Overview
3.1 Introduction
Chart 3.1: Misery Index (Excel Spreadsheet)
3.2 Policy Priorities
3.3 Current Position of the UK Economy
Chart 3.2: Base Rate Peaks & Troughs (Excel Spreadsheet)
3.4 Conclusions
Specimen Questions

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Macroeconomic Policy

Overview
4.1 Aims
4.2 Monetary Policy
Chart 4.1: Yield Curves Compared
Chart 4.2: GDP Trends 1988 Q1 - 2007 Q1 (Excel Spreadsheet)
Chart 4.3: UK Base Rates 1960 - 2006 (Excel Spreadsheet)
Chart 4.4: UK Long Run Inflation 1960 - 2006 (Excel Spreadsheet)
4.3 Fiscal Policy
Chart 4.5: Public Sector Current Receipts, Expenditure and Budget Surplus (Excel Spreadsheet)
Chart 4.6: Public Sector Net Debt and Net Cash Requirement (% of GDP) (Excel Spreadsheet)
Chart 4.7: Government Spending and GDP (Excel Spreadsheet)
Chart 4.8: Golden Rule: Current Surplus (Excel Spreadsheet)
Chart 4.9: Sustainable Investment Rule (Excel Spreadsheet)
Chart 4.10: The New Economic Cycle (Excel Spreadsheet)
Specimen Questions

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Microeconomic Policy

Overview
5.1 Macro v Micro
5.2 Industrial Policy in the UK 1945-97
5.3 Regional Policy 1945-97
5.4 Microeconomic Policy Since 1997
5.5 Regional Policy Since 1997
5.6 Competition Policy Since 1945
Specimen Questions

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Effects of Stability & Low Inflation

Overview
6.1 The 90s & 00s Compared with the 70s & 80s
Chart 6.1: The New Stability (Excel Spreadsheet)
Chart 6.2: Base Rate Trends (Excel Spreadsheet)
6.2 Living with Low Inflation
Chart 6.3: Unemployment (000's, ILO Measure) (Excel Spreadsheet)
Chart 6.4: Repayment as a Share of Income (%) (Excel Spreadsheet)
Chart 6.5: Company Profits (Excel Spreadsheet)
Chart 6.6: The Saving Ratio (Excel Spreadsheet)
6.3 The next decade
Specimen Questions

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Growth

Overview
7.1 Overall Trends 1960-2006
Chart 7.1: Long Term Trends in GDP (Excel Spreadsheet)
7.2 Measuring National Activity
7.3 Output Trends
Table 7.1: GDP Growth by Sector, 1996 - 2006 (PDF)
Chart 7.2: Contribution to Growth by Industry (Excel Spreadsheet)
Chart 7.3: Farm Incomes and Prices (Excel Spreadsheet)
Chart 7.4: The Decline of Manufacturing (Excel Spreadsheet)
Chart 7.5: Manufacturing v Services (Output Trends) (Excel Spreadsheet)
Chart 7.6: Changes in UK Construction Output (Excel Spreadsheet)
Chart 7.7: Manufacturing v Services (Excel Spreadsheet)
Chart 7.8: Sectoral Output Trends (Variations around GDP Average - Percentage Points) (Excel Spreadsheet)
7.4 Expenditure Data
Table 7.2: Main Expenditure Components of GDP, 1999-2006 (PDF)
Chart 7.9: Consumer Confidence and Spending (Excel Spreadsheet)
Table 7.3: Shares of Expenditure by Main Category, 1999 - 2006 (% of Shares) (PDF)
Table 7.4: Growth of Spending Components of GDP, 1999 - 2006 (% of Shares) (PDF)
Chart 7.10: Contributions to Growth by Spending Category (Excel Spreadsheet)
7.5 Income Measure
Table 7.5: GDP by Category of Income, 1999 - 2006 (PDF)
Table 7.6: Shares of GDP Income by Main Category, 1999 - 2006 (PDF)
Table 7.7: Growth of GDP Income by Main Category, 1999 - 2006 (PDF)
Table 7.8: Real GDP per Head, 1960 - 2005 (PDF)
7.6 Conclusions
Specimen Questions

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Inflation

Overview
8.1 The Costs of Inflation
8.2 Inflation and Purchasing Power
Table 8.1: Internal Purchasing Power of the Pound (PDF)
8.3 Measuring Inflation
Table 8.2: Annual Inflation Rates (Annual Percentage Change) (PDF)
8.4 Trends
Chart 8.1: Producer Price Trends (Annual Percentage Change) (Excel Spreadsheet)
Chart 8.2: Retail Price Trends (Annual Percentage Change) (Excel Spreadsheet)
8.5 Deflation
Specimen Questions

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Money & Banking Regulation

Overview
9.1 Introduction
9.2 Fisher Equation
9.3 Velocity of Circulation
9.4 Measures of Money
Chart 9.1: Growth in Narrow Money and Retail Sales (Annual Percentage Change) (Excel Spreadsheet)
Chart 9.2: Narrow Money Velocity of Circulation (Excel Spreadsheet)
9.5 Counterparts to Money
9.6 Trends
Chart 9.3: Growth in M4 and GDP (Annual Percentage Change) (Excel Spreadsheet)
Chart 9.4: Growth in M4 Lending and GDP (Annual Percentage Change) (Excel Spreadsheet)
9.7 Money in the EU
9.8 Money in the US
9.9 Financial Regulation
Specimen Questions

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Government

Overview
10.1 The Role of Government
10.2 Economic Functions of UK Government
10.3 Sources of Government Revenue
10.4 Distribution of Government Spending
10.5 Summary
Specimen Questions

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The Labour Market

Overview
11.1 Significance of the Labour Market
11.2 Measures of Unemployment
11.3 Recent Trends in Unemployment
Chart 11.1: Claimant Count (Excel Spreadsheet)
Chart 11.2: Claimant Count by Gender (Excel Spreadsheet)
Chart 11.3: Long Term Unemployed (Excel Spreadsheet)
Chart 11.4: Unemployment by Age (Excel Spreadsheet)
11.4 Employment
Chart 11.5: Employment (Workforce Jobs) (Excel Spreadsheet)
Chart 11.6: Workforce Jobs by Industry 1978 and 2006 (Excel Spreadsheet)
Chart 11.7: Total Employment (Excel Spreadsheet)
Chart 11.8: Employment Rates by Gender (Excel Spreadsheet)
Chart 11.9: Part-Time Employment (Excel Spreadsheet)
Chart 11.10: Economy Inactivity (People of Working Age) (Excel Spreadsheet)
Chart 11.11: Economic Inactivity Rates (% of working age population) (Excel Spreadsheet)
Chart 11.12: Economic Inactivity (Excel Spreadsheet)
11.5 The Future Shape of the Labour Force
Table 11.2: Economic Activity by Age and Gender (PDF)
11.6 The Regional Dimension
11.7 The Demand for Labour
11.8 Earnings
Chart 11.13: Average Earnings Growth (Excel Spreadsheet)
11.9 The National Minimum Wage
11.10 International Comparisons
11.11 Learning to Live with Low Unemployment
Specimen Questions

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Social Framework

Overview
12.1 Introduction
12.2 Income Growth
Chart 12.1: Real GDP per Head (Excel Spreadsheet)
12.3 Income Distribution
Chart 12.2: Gini Coefficient: International Comparison 2000 (Excel Spreadsheet)
Chart 12.3: Original Income and Final Income of Households, 2005/06 (Excel Spreadsheet)
Chart 12.4: Household Incomes: IPS Calculations (Excel Spreadsheet)
Chart 12.5: Relative Poverty in the UK: Percentage of People in Households with Income Below 60% of Median Income 
(Excel Spreadsheet)
12.4 Demographics
Chart 12.6: Components of Population Change (Excel Spreadsheet)
Chart 12.7: Fertility Rates (Excel Spreadsheet)
Chart 12.8: Life Expectancy at Birth (Excel Spreadsheet)
Chart 12.9: Ageing Population -1 (Excel Spreadsheet)
Chart 12.10: Ageing Population -2 (Excel Spreadsheet)
Specimen Questions

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Regional Perspective

Overview
13.1 Introduction
13.2 The Regional Dimension
Chart 13.1: Regional Growth of GDP 1995 - 2005 (Excel Spreadsheet)
Chart 13.2: Regional Unemployment (ILO Measure: % of Workforce - 3rd Quarter 1992) (Excel Spreadsheet)
Chart 13.3: Regional Unemployment (ILO Measure: % of Workforce - 1st Quarter 2007) (Excel Spreadsheet)
Chart 13.4: Change in Unemployment Rates (ILO Measure: Between 2000 Q1 and 2007 Q1 (Excel Spreadsheet)
13.3 The Sectoral Mix
Chart 13.5: Growth of Manufacturing Output 1994 - 2004 (Excel Spreadsheet)
Chart 13.6: Growth of Financial and Business Services Output 1994 - 2004 (Excel Spreadsheet)
13.4 Recent Trends - Re-emergence of the N/S divide
13.5 Intra-Regional Differences
13.6 The Government's Approach
13.7 The European Dimension
Specimen Questions

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Housing Market

Overview
14.1 Significance of Housing
14.2 Industry Dynamics
14.3 Regional Housing Markets
14.4 House Purchase
Chart 14.1: The Housing Market (Excel Spreadsheet)
Chart 14.2: Housing Affordability (Excel Spreadsheet)
14.5 Wealth Effects of Owner-Occupation
Chart 14.3: The Saving Ratio and the Rate of Inflation (Excel Spreadsheet)
Chart 14.4: Consumer Borrowing (Excel Spreadsheet)
14.6 Housebuilding
14.7 Buy-to-let
14.8 The Housing Market and the Euro
14.9 Outlook for Housing and Housebuilding
Specimen Questions

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Company Finance

Overview
15.1 Defining the Corporate Sector
15.2 The Business Stock
15.3 Internal Finance
Chart 15.1: Breakdown of Total Corporate Income (Excel Spreadsheet)
Chart 15.2: Breakdown of Total Corporate Income (Excel Spreadsheet)
15.4 Building the Business
Chart 15.3: Company Retained Income and Investment (Excel Spreadsheet)
15.5 External Finance
Chart 15.4: External Finance and Acquisition of Financial Assets by Company (Excel Spreadsheet)
Chart 15.5: Company External Finance by Type (Excel Spreadsheet)
15.6 Mergers and Acquisitions
Chart 15.6: Acquisitions and Mergers in the UK (Excel Spreadsheet)
15.7 Business Failures
Chart 15.7: Total Company Insolvencies, England and Wales (Excel Spreadsheet)
15.8 Profits & Profitability in the 2000s
Chart 15.8: Corporate Profitability Relative to GDP (Excel Spreadsheet)
15.9 Profit Warnings
Chart 15.9: Profitability (Net Rates of Return on Operating Assets) (Excel Spreadsheet)
15.10 Size Matters Less
15.11 Sectoral Differences
15.12 Financial Benchmarks
15.13 Ratio Analysis
15.14 Future Environment
Specimen Questions

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Single Currency

Overview
16.1 Introduction - Road to European Integration
16.2 Creating a Single Currency
Chart 16.1: Inflation and Interest Rates in the Eurozone (Excel Spreadsheet)
Chart 16.2: Budget Balances in 1998, 2002, 2004 and 2006 (Excel Spreadsheet)
Chart 16.3: The Value of the Euro (Excel Spreadsheet)
16.3 The UK and the Euro
16.4 Pros and Cons
Chart 16.5: The UK Trade in Goods with the EU (Excel Spreadsheet)
Chart 16.6: UK & European Interest Rates (Excel Spreadsheet)
Chart 16.7: EU Countries' Share of Inward Direct Investment 2006 (Excel Spreadsheet)
16.5 Convergence - the Acid Test
Chart 16.8: The UK's Rising Tide of Debt (Excel Spreadsheet)
Chart 16.9: Owner-Occupation in the EU (Excel Spreadsheet)
16.6 The Future Shape of the Euro
Specimen Questions

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UK External Position

Overview
17.1 Importance of Trade
Chart 17.1: The Growing Importance of Trade (Excel Spreadsheet)
17.2 Measurement of Trade
Chart 17.2: Growth of UK Trade Volumes (Excel Spreadsheet)
17.3 UK's Direction of Trade
17.4 Trade in Services
Chart 17.3: Net Trade (Excel Spreadsheet)
17.5 Trade in Goods
Chart 17.4: Balance of Trade in Goods (Excel Spreadsheet)
Chart 17.5: UK Trade in Oil (Excel Spreadsheet)
Chart 17.6: Balance of Trade in Goods (Excel Spreadsheet)
Chart 17.7: Food and Raw Material Imports (Excel Spreadsheet)
Chart 17.8: The Significance of Trade in Manufactures (Excel Spreadsheet)
Chart 17.9: The Importance of EU Trade (Excel Spreadsheet)
17.6 The Current Account Explained
Chart 17.10: The Current Account (Excel Spreadsheet)
Chart 17.11: The Growing Contribution of Investment Income (Excel Spreadsheet)
Chart 17.12: The UK's Trade in Goods Deficient (Excel Spreadsheet)
17.7 Importance of Global Investment
Chart 17.13: International Investment Position (Excel Spreadsheet)
17.8 International Trade and Exchange Rates
Chart 17.14: Sterling Trends (Excel Spreadsheet)
Chart 17.15: Trade in Goods Service (Excel Spreadsheet)
Specimen Questions

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European Union

Overview
18.1 Introduction - The 'European Project'
18.2 An Ever-Larger Union
18.3 Where Next for Europe - Constitution and Crisis
Specimen Questions

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Global Economy

Overview
19.1 Introduction
19.2 Structure of the Global Economy
19.3 Long Term Trends in the Global Economy
19.4 Current Situation and Outlook
19.5 International Trade Flows
19.6 International Economic Co-operation
Specimen Questions

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Contents

Acknowledgements
For Your Amusement
HSBC Education Trust

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Appendices

Microeconomic Policy

Appendix 4.1 Competition Commission

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Growth

Appendix 7.1 GDP & GVA
Appendix 7.2 National Accounts Aggregates
Appendix 7.3 GVA by Output (2003 prices)
Appendix 7.4 GVA by Industry (current prices)
Appendix 7.5 GVA by Industry (2003 prices)
Appendix 7.6 GDP by Expenditure (current prices)
Appendix 7.7 GDP by Expenditure (2003 prices)
Appendix 7.8 Household Final Consumption Expenditure - Component Categories (2003 Prices)
Appendix 7.9 Gross Fixed Capital Formation Main Categories (2003 Prices)
Appendix 7.10 GDP by Income (current prices)
Appendix 7.11 Households' Disposable Income and Consumption
Appendix 7.12 Income, Product & Spending per Head

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Inflation

Appendix 8.1 Internal Purchasing Power of the £
Appendix 8.2 UK Price Trends

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Money & Banking Regulations

Appendix 9.1 M0 Velocity of Circulation and Money Stock
Appendix 9.2 M4 Velocity of Circulation and Money Stock
Appendix 9.3 UK Bank and Building Society Lending to UK Private Sector (£m)

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Labour Market

Appendix 11.1 Labour Force Survey
Appendix 11.2 Employment - Employees, Self Employed, Full-Time, Part-Time
Appendix 11.3 Inactivity Rate
Appendix 11.4 Employment Rates, Men and Women
Appendix 11.5 Unemployment -ILO Measure
Appendix 11.6 Workforce jobs

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Social Framework

Appendix 12.1 GDP & Income

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Regional Perspective

Appendix 13.1 GDP & GDP per Head

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Single Currency

Appendix 16.1 Population Trends EU, USA, Japan
Appendix 16.2 GDP Growth Rates EU, USA, Japan
Appendix 16.3 GDP per Head of Population for EU Countries, the US and Japan
Appendix 16.4 Consumer Expenditure Price Deflator EU, USA, Japan
Appendix 16.5 Unemployment Rates EU, USA, Japan

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External Position

Appendix 17.1 Value of Trade in Goods and Services
Appendix 17.2 Trade in Goods with EU and non-EU Countries
Appendix 17.3 Price Indices (Trade in Goods)
Appendix 17.4 Volume Indices (Trade in Goods)
Appendix 17.5 Value of Trade in Goods by Commodity
Appendix 17.6 UK Trade in Goods by Area
Appendix 17.7 UK Trade in Goods - Selected Countries
Appendix 17.8 UK Assets & Liabilities
Appendix 17.9 Balance of Payments (Summary)
Appendix 17.10 Average Rates against Sterling

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Global Economy

Appendix 19.1 Pattern of World Merchandise Trade (2005 $bn )
Appendix 19.2 World Trade Growth

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Charts

Current Economic Situation
Macroeconomic Policy
Effects of Stability & Low Inflation
Growth
Inflation
Money & Banking Regulation
The Labour Market
The Social Framework
Regional Perspective
Housing Market
Company Finance
Single Currency
UK External Position
European Union
Global Economy

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Help

Using the UK Economy Explained
Frequently Asked Questions
Information for Teachers
Technical Information