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COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
PRESENTED BY:
EDWARD KENNY – COSTS AND PRICESLUKE JONES – DEMANDDAVID HULSE – MONEY AND
FINANCIAL MARKETS SCOTT WATSON – LABOUR MARKET
WIRRAL GRAMMAR SCHOOL FOR BOYS
TARGET 2.0 TEAM
COSTS AND PRICES
PRESENTED BY:
• Oil Prices• Gas Prices• Food Prices
• VAT• CPI
• Producer Prices
This Section Covers:
EDWARD KENNYWirral
Grammar School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Oil price hits six-month high of $83.45
• “Oil price to continue to rise” (Ali Al-Nuami; 01/11/10)
Oil Prices
WirralGrammar
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COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
WirralGrammar
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• 2008 – 50% increase• 7% price rise pending in January• 25% cost increase
Gas prices
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
• Recent sharp rises in food prices do not point to a repeat of the food price spike in 2007-8 (UN's Food and Agriculture Organization; 24/09/10)
Wheat prices soar causing price spike scare
Food prices
OVERALL SUMMARY
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
VAT
OVERALL SUMMARY
Last time VAT was increased it was only a short term increaseIt only lasted four months.
1991 CPI Great Britain
Rise in VAT in Jan 2011 of 2.5% from 17.5% to 20%Direct inflationary pressure on the economy
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
CPI
Causes of fluctuationRecessionCompare with RPIHouse price changes
OVERALL SUMMARY
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
Producer PricesOutput price inflation 4.4 per cent in September.
Input price annual inflation rose 9.5 per cent in September compared to a rise of 8.7 per cent in August.
Month on month the input prices up 0.3 per cent between August and September.
OVERALL SUMMARY
WirralGrammar
School
SummaryDEMAND
PRESENTED BY:
•Property Market• GDP
•Consumer Spending•Exports
This Section Covers:
LUKE JONES
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
Energy Prices rising causing inflationary pressure
Food prices increasing also causing inflationary pressure
CPI stabilising above 2.0% target
Input prices stabilising and so are output prices
Therefore on the whole, hold interest rates with a scope to increase
OVERALL SUMMARY
WirralGrammar
School
Infl
ati
on
ary
P
ressu
res
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
Property Market
OVERALL SUMMARY
WirralGrammar
School
Top economists believe that by the end of 2011 growth will be secured and the property market will
pick up again.
UK construction has suffered a 14% fall between April and August.
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
GDP
OVERALL SUMMARY
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
WirralGrammar
School
Consumer SpendingUK Domestic demand has increased by 11% since
2009, but now...
£90bn government spending cuts; job prospects worsening; consumer confidence suffering
The average UK household had only £131 a week of discretionary spend in February,
9.2 % less than the previous year
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
ExportsManufacturing in the UK up from -14% Y.O.Y. In 2009.
To 5% Y.O.Y. In 2010.
Due to UK exports, of premium nature gaining popularity in
developing economies. Scotch Whisky exports up 17%.
OVERALL SUMMARY
WirralGrammar
School
MONEY AND FINANCIAL MARKETS
PRESENTED BY:Consumer confidence worsening
House prices and construction troughed; may
not recover until 2011
High-street suffering; reduced disposable income
Despite this, AD stimulated by exports to the East...
Hold rates at 0.5%; no QE, allowing scope.
• Quantitative Easing• Stock Markets• Exchange Rates
This Section Covers:
DAVID HULSE
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Summary
WirralGrammar
School
Infl
ati
on
ar
y
Pre
ssu
res
Defl
ati
on
ar
y
Pre
ssu
res
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Quantitative Easing
-Intention to stimulate investment
-UK strategy currently paused at £200bn
- Americans introducing an additional US$600bn
- Knock-on effects around the world
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
FTSE 100 – 3 year trend
Peak 10th December 2007 – 6,568
Trough 3rd March 2009 – 3,518
Currently recoverin
g and predicte
d to remain
between 5500-5600
Stock Markets
OVERALL SUMMARY
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
Risen from 1.43 to 1.60 over the last six months
Overall trend is slightly decreasing – 1.64 down to 1.60 over the whole period
Exchange Rates
OVERALL SUMMARY
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
General trend over the period is increasing – from 1.11 to 1.15
6 month period – 1.15 to 1.14
Exchange Rates
OVERALL SUMMARY
WirralGrammar
School
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
The pound per dollar is expected to experience a steady rise into 2011
The pound per Euro is expected to experience a steady drop to .75 by 2012
Exchange Rates
WirralGrammar
School
• Unemployment• Employment• Productivity
• Earnings Growth
LABOUR MARKET
PRESENTED BY:
This Section Covers:
SCOTT WATSON
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
Summary
OVERALL SUMMARY
WirralGrammar
School
Increased Confidence
Investment levels increasing
Strength of the £
International Uncertainty
Infl
ati
on
ar
y
Pre
ssu
res
Defl
ati
on
ar
y
Pre
ssu
res
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Unemployment
WirralGrammar
School
●Unemployment - 2.47 Million
● Decline of available jobs
●Companies strive for productive efficiency
●Deflationary effect as consumer spending is lowered
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Employment
WirralGrammar
School
●Spending cuts and VAT rise
Cuts to cost estimated 1.6 million jobs
900 000 private sector jobs could go.
inevitable public sector job cuts
sharp increase in part time jobs as apposed to full time jobs
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Productivity
WirralGrammar
School
The growth of GDP per hour worked is highest for the UK
Relative to other countries the UK is becoming more productive
Therefore lower costs relatively and more appealing exports
This is an Inflationary pressure
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
Earnings Growth
This is below the rate of inflation at the moment meaning that people have less disposable income , which means lower consumer spending and as a result is a deflationary pressure
Here we can see that the average earnings of employees has risen by 2.0 %
WirralGrammar
School
OVERALL SUMMARY
Infl
ati
on
ar
y
Pre
ssu
res -25% devaluation of the £ - Since Mid-
2007
- Increasing food, commodity & energy prices
- VAT to 20% in January
Defl
ati
on
ary
P
ressu
res - Spare capacity – 7.7%
unemployment
- Fiscal Tightening
- International Uncertainty
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
SummaryThe future shows no signs of improvement due to events such as spending cuts and a rise in vat
We can that there are mainly deflationary pressures in the form of:● Unemployment● Earnings growth
●As opposed to the inflationary pressure of increased productivity
WirralGrammar
School
Infl
ati
on
ar
y
Pre
ssu
res
Defl
ati
on
ar
y
Pre
ssu
res
COSTS AND
PRICES
DEMAND
MONEY & FINANCIAL MARKETS
LABOUR MARKET
OVERALL SUMMARY
WirralGrammar
School
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