Budget 2007

ECONOMICS OF THE MARKET, INCOME &EMPLOYMENT

by

Christian Conrady

Introduction

Every country is committed to manage their economy effectively. The exigency to manage effectively is the outcome of the limited recourses and the tendency of unlimited needs.

This assignment deals with the macro-economic position of the United Kingdom and is associated with Gordon Browns Budget of 2007. The main topics will include the economic growth, the unemployed rate, inflation, the balance of payment at present time, and the plans of the government concerning the income and expenditure levels.

The main parts of this assignment will include a short definition of macro-economics, and about economic growth, a research of Gordon Browns Budget of 2007, some critic views of other politicians or journalists about his budget and in the end of this assignment these information of the UK economy will be theoretically analysed.

Macro-Economics

As apposed to the micro-economics the macro-economics analyses the questions of the overall economies behaviour, for example the alteration of the entire income, the rate of inflation or the business fluctuation.

The macro-economics tries to find a declaration for different kind of fluctuation in the economic system for example in connection with taxes.

The macro-economics is used to affect the total development in the short-middle and long term of a country.

(Prof Dr. Paul J.J. Welfens 2002)

Gordon Browns UK Budget of 2007

Economic Growth

Economic Growth is the relative change of the power in a certain period of the economy in a country. To achieve a accretion there has to be a gain in efficiency, stimulated by physical capital e.g. machinery, human resources e.g. quantity of labour, natural resources e.g. oil or technical knowledge just like for example IT-business.

On the 21st of March Great Britain's Chancellor of the Exchequer presented his budget of the first Quarter of 2007.

He announced that Britain's gross domestic product raised to 0.7% that is annualized a accession of 2.7% and that connoted that it was the 5th time in a row a rose above the potential growth of 2.6%.

The upward trend which started in 2005 continues. Gordon Brown also annunciate that the income TAX will be cut from 22p to 20p but he will also has to lend another Ј10 billion in the next four years. Overall Great Britain borrowed now over Ј100 billion.

The Economic Growth is measured by the raise of the GDP (gross - domestic - product). The GDP is the monetary value of all goods and services which get produced in a certain country minus intermediate inputs.

http://www.wirtschaftundschule.de/Lexikon/W/Wirtschaftswachstum.html;jsessionid=57802F4853EDD107C6202FA155298FC3 1/05/07

GDP Growth

UK economy up by 0.7% in Q1 2007

http://www.statistics.gov.uk/cci/nugget.asp?id=192

Services

In Economics a service is described as an activity which does not underlie a physical product.

Accustomed the service-sector was powerful, this sector raised 0.8% compared to the last quarter.

The most meaningful increase was in the business services and finance sector it raised by 1.4% and the biggest decrease was in the hotel/restaurant sector it fell by 0.2%.

Also the domain of transport and communication was positive, and raised 1.7% in comparison to the previous quarter. Another upswing was followed in the building industry and the water, gas and electric sector. A branch which remained static was in contrast the production industry.

Index of Services

0.8% 3 monthly rise into February

Index of Services (2003 =100) % growth

http://www.statistics.gov.uk/cci/nugget.asp?id=558 1/05/07

Un/employment

In economics unemployment is described as the failure/missing of paid employment of these who are able and searching for work.

The unemployment rate in the United Kingdom was in March at about 2.9% that means that the rate of unemployment sink from September 2006 to March 2007 up to 46.000 employees.

As it is shown on the graph below the difference between the lowest and highest rates of employment in a region is over 30 %. It all depends on the region the lowest unemployment rate is in South Northamptonshire in this region 90.1% are employed on the other side there is Tower Hamlets with an unemployment rate of 52.9%.

Employment

Rate falls to 74.3% in 3 months to Feb 2007

Local Employment

Highest rate of 90.1% in South Northants

Range of working age employment rates within English regions and GB countries, October 2005 to September 2006

http://www.statistics.gov.uk/cci/nugget.asp?id=252 1/05/07

As usual the house prices rose again and the demand for mortgage loan has in the last three month reached another record of over 10.billion pound.

Inflation

In economics Inflation is described as