Economics have an enormous number of definitions and a number of contradictions are found in it. All the definitions of economics have passed through 3 stages. Classical economists stressed on wealth; new classical criticizing the concept of wealth, made economic welfare the center of their thoughts while the modern economists made abundance of wants and scarcity of means as a base of their definitions of economics. Adam Smith represents classical, Alfred Marshal represents the neo-classical school of thoughts and the moderns are represented by Lionel Robbins.
Adam smith (1723-1790) who is known as a father of economics, in his work “An enquiry into the causes and nature of wealth of nations” defined economics first time in 1776. He, defining economics said that:
“Economics is the study of wealth”.
The above mentioned book of Smith has been divided into four parts; Consumption, production, exchange and distribution of wealth. The concept of Economics is so broad that it covers a lot of things as whole, which includes economic analysis and cyclic trends of the economy. The stance of economic analysis is quite crucial from the standpoint of an organization as a whole. Economic analysis based on different economic indicators like Consumer Price Index (CPI), Demographic Change, Consumer Trends and Job creation in the country. Inevitably the economic analysis of every country will be change from the other, as it incorporates the data of that particular country. In this short analytical paper we will discuss different economic indicators from the prospective of United Kingdom (UK). You all are cognizant that the entire world has just come out from the phase of recession but not cent percent. UK is among those countries who received real jolts due to the current economic slump. Let me tell you the current economic situation of the country first and then we will shift our gears towards the main theme of economic analysis of different indicators.
United Kingdom is among the big economies in the world. United Kingdom is in the top 4 economies of Europe and the main victim of the current liquidity crisis because the financial sectors are the biggest industry in Britain, which are in severe distress due to the current financial turmoil. United Kingdom (U.K) is one of the countries which have been badly hurts by the credit crunch as almost every industry continuously slashing jobs from the past 8 to 9 months. The rate of unemployment manifests a horrible figure and shows that over 6 million people lost their jobs due to unavailability of work and credit in the industries (IMF, 2008).. The main threat for the UK economy is that, their currency value consistently collapse against the major currencies in the world. Mounting unemployment rate, unavailability of adequate credit, declining stock market, deteriorating export and shrinking currency resultantly loose the confidence of the investors, as neither the enterprises nor the individuals are willing to borrow money form the banks, although the banks of UK cut down their lending interest rate to 1% but still unable to win the previous confidence and moral of the customers. The International Monetary Fund (IMF) has revised its Gross Domestic Product (GDP) for the country FY 2010 of -1.5% to -2.8% (IMF, 2008).
Finance professionals thought a year ago that the UK economy is strong enough which had become particularly resilient to shock, but after the dwindling value of currency and continuously abating deposits in the banks, the perception doesn’t seem to be work for Britain. Recent strong actions by the UK government and Bank of England (BOE) seem to be worthwhile to stabilize the economy (Bernanke, 2009). Increasing the tax rate on the corporation up to 50% and guaranteeing every person under age of 25 who has been out of the job from last 12 months will be offered a job looks like a brutal and major action to bring the economy back on track. After describing the economic situation of UK, we are all set to analyze the economic trends for the country.
Let’s first come over the inflation or Consumer Spending which can be measured by the CPI analysis. According to the press release of National Statistics UK, the Inflationary phase for the economy has over now and the CPI figure has also decreased momentously towards a stabilize figure of around 3.5% which was at 5% a year before due to the financial constrain of the economy. The decrease in the inflation rate by 1.5% or by 30% is a positive sign for the economy Producer Price Index by 3.2%. Now comes towards one of the main indicators of economic use to measure the financial health of a particular country. The employment appraised for the three months to May 2010 was 72.3 percent, up 0.3 on the part. The number of people in employment bigger by 160,000 on the area to catch 28.98 million. The magazine improved in absolute employment was mainly ambitious by part-time employees, which better by 117,000 on the area to touch 6.63 million, and person-employment, which rose by 59,000 on the lodge to spread 3.93 million (Future Economic Environmental Analysis 2010). The number of rounded-time employees chop by 22,000 on the quarter to attain 18.20 million. The cause behind the accelerated figures of employment rates is due to demand and supply concept. At the time of recession when the supply was on excess on demand, the companies were lying off the jobs but now the country has entered in the phase of recovery and job is creating more frequently. In my view if the country managed to go with this pace than in next 10 to 20 years the employment rate of the country becomes better with their Gross Domestic Product (GDP) rate which already showed a sign of recovery. Gross Domestic Product (GDP) amplified 1.1 percent in the back house of 2010, compared with an escalate of 0.3 percent in the previous part. The swelling in the next area is due to expansion across the plank for example in each of army, construction and production.