Question

Conduct an economic analysis on England. Talk about GDP, Brexit, Consumer springing habits, exchange rates, and other important factors. Must be in essay format. Two pages.

Answer 1

UK Macroeconomic forecasting

The UK GDP has been well stabilized at 2.62 lakh crores and has seen rising per capita income post Brexit due to higher employment opportunities for UK citizens coupled with strict immigration laws and visa rules.

Implications of Brexit

Brexit has made things better apparently as share of trade and profits have risen and has helped big boost in spending income and consumption which results in higher GDP and moderate inflation in CPI terms notch higher to 1.9% within prescribed limits whereas unemployment decreased to 3.9%. The year on year GDP growth however has rationalised to 0.2% due to rising geopolitical tensions in Europe and Brexit effects initially.

Exchange rate mechanism

Exchange rate versus dollar has shown near term depreciation and looks to stabilise in moderate term due to contractionary monetary policy by US Fed.

Global economics and Effects on UK

UK has been significantly hit internationally due to Chinese government trade policies and devaluation of yuan. Moreover the rising Us China trade policies have negative Implications on global economic output as well.

The Big Issue and Underlying Cause

The biggest issue been surfaced is US China Trade War, Immigration Laws, US National Debt, Foreign Relations policy  

US and china have great history of trade wars however recent times has been largely due to sanctions been imposed on china by USA.

Recently, USA slpped tarrifs on 40% of chinese goods. which has caused prices of US goods to go up substantially becuase cheap imports fro china have been stopped.USA has also stopped cheap imports of steel and as a result Chinese government too has imposed substantial tarrifs on USA goods.

As a result, there has been currency devaluation in China to make it goods look more cheaper and attractive and has started selling Goods in emerging markets. US goods however have become more costlier and hence sales have decreased.

Chinese government has aggravated trade war by imposing fresh round of tarrifs , however before G20 summit which will be held in 2018, such issues will be resolved.

Since, China has imposed tarrifs we see there has been lack of entry of chinese workrs and visas in USA which has nullified the clear cut winner. Because of trade war, India has managed to export steel and aluminium to US markets and hence has been the greatest beneficiary.