Economic Climate
Key economic trends, 1991-2008
This graph shows the three key national economic indicators – Gross Domestic Product (GDP) growth, inflation and interest rates – from 1991-2008.
The recession of the 1990s was characterised by high inflation and high interest rates combined with a fall in GDP. The current economic problems have occurred following a sustained period of low inflation and economic growth, highlighting the extraordinary nature of the global downturn triggered by the collapse of the banking and financial sectors.
In 2008, GDP growth stood at 0.7%, a drop of 2.3% from 2007, inflation dropped 0.3% to 4.0% from 2007 and interest rates stood at 2.0% in 2008 compared to 5.5% in 2007. Interest rates in 2008 represent a five-fold decrease from 1991 rates, when they stood at 10.5%.
Source: UK Housing Review, 2009: 88
Business survival rate, 2002-2007
This graph shows the percentage of VAT-registered businesses that survived for at least a 12-month period between 2002 and 2007. This can be used as a measure of the local economic climate and resilience of small businesses.
Between 2002 and 2006 there was a general improvement in the initial survival of businesses in all countries of the UK (3.6% increase), with Wales improving the most over the period (+5.1%), followed by England (+3.6%), Scotland (+2.7%) and Northern Ireland (+1.3%). However, declines were seen in 2007 as the UK dropped to a business survival rate of 95.5%, England to 95.5%, Wales to 94.7%, Scotland to 96.1% and Northern Ireland 94.6%.
Differences each year show that survival rates are volatile and may have been affected by the start of the recession in 2007.
Source: Regional Trends, 2009: Table 3.19
Labour productivity, 1997-2007
This graph highlights the relative labour productivity (the amount of goods and services produced by the workforce) in the four countries of the UK for 1997-2007. This is measured by the gross value added (GVA) for every hour worked, against the benchmark index of the UK (100).
England is the only country that has consistently performed well and improved its relative productivity, while Wales has seen a steady decline in its productivity from 93.2 in 1997 to 85.6 in 2007.
Scotland's performance has been inconsistent, decreasing slowly in the late 1990s and improving during the early- to mid-2000s. By contrast, Northern Ireland experienced declining productivity until 2005, after which it slowly improved to reach levels similar to Wales in 2007.
Source: Regional Trends, 2009: Table 3.3
Savings and assets by household types in Great Britain, 2008/09
Savings and assets held by different household groups can be used to understand the ability of households to cope with potential financial shocks such as the loss of a job, emergency home repairs or an increase in housing costs or interest rates.
Within Great Britain, ‘single parents’ are in a particularly vulnerable financial situation as 63% have no savings and a further 23% have less than £1,500 in savings. Other vulnerable households include those comprised of ‘one or more disabled adults under pension age’ and ‘one or more adults unemployed under pension age’ with 41% and 46% of these households respectively having no or very little savings.
At the opposite end of the spectrum, households that are most resilient to changing financial circumstances are those with ‘two or more adults’ and those with ‘one or more adults over pension age’. About a quarter of these households have savings and assets above £20,000, although pensioners may face particular cost shocks relating to health and social care.
Source: Department for Works and Pensions, 2010