Macroeconomic Analysis: UK Economic Performance, Issues, and Policies

This report provides an overview of macroeconomics, focusing on its principles and applications within the UK economy over the past decade. It defines macroeconomics and its objectives, discusses the UK's economic system, and examines the macroeconomic policies used by the government to enhance economic welfare. The report identifies key issues faced by the UK government, including the impact of Brexit and the COVID-19 pandemic, and explores potential solutions such as fiscal and monetary policies. It further analyzes the UK's Gross Domestic Product (GDP) trends and addresses challenges like wage variations, gender inequality, and labor market conditions. The report concludes by emphasizing the importance of maximizing financial involvement and maintaining economic stability to improve the overall living standards in the UK.

Principles and
Applications of
Macroeconomics

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Defining macroeconomics and its objectives..............................................................................3
Economic system of UK.............................................................................................................4
Government make use of some macroeconomic policies for betterment of economic welfare. 5
How the economy of the United Kingdom can better acquire the success in the over 10 Years.
.....................................................................................................................................................6
Discussing the issues which the government of UK has been dealing with since last 10 years. 7
Explaining the solution of the issues which are listed above:.....................................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Macroeconomics refers to integral part of economics which evaluate or analyse the
actions of whole economy of the country. In the below report all the important aspects and
methods of macroeconomic are included. It helps the country to normalise the conditions of
inflaton and recession. The various tools and methods used in macroeconomics are monetary
policy and fiscal policy (Bhattacharya and Howard, 2021). In this report all the ways are mention
below by the help of which the UK government achieve their economic welfare in the last 10
years. The UK face different barriers in the last 10 years while achieving the economic welfare.
The most major barrier faced by the UK government are Brexit and Covid pandemic. Brexit is
considered as an event in which the Britain get exit from the European union(EU) and cancel
their all free trade deal with the European countries. This word Brexit is made by two words
Britain and exit. This event was occurred on 31st January 2020. The another barrier is Covid
pandemic by which the conditions of all economic countries get affected. The UK government
also introduce various policies in the country in which the most important policy introduce by
the government is the recovery plan. In this plan the UK government reduces the tax burden
from the industries so that they can boost their sales in the market and bring back the economy of
the country on track.
MAIN BODY
Defining macroeconomics and its objectives
Macroeconomics- It refers to study of all serious threats of the economy like rising prices,
deflation, recession, stagflation, poverty, unemployment, population and many more. By the help
of the macroeconomics the economic conditions of the country can be neutralised (Bock, 2020).
The objectives of macroeconomics are as follows-
Control prices- The primary objective of macroeconomics is to control the prices from
the increasing. The rise in price leads to decrease in the purchasing power of the individual. AS a
result individual cannot be able to purchase the product and services on that price and due to this
condition the economy of the country can be collapsed. To control the situations like these the
tools and techniques of macroeconomics can be used.
Improve the life style- The next objective of macro economics is to improve the life
style of the citizens of the country. Improve in lifestyle refers to provide better health care

facility, proper infrastructures, better education, and fresh food so that they can live a healthy and
prosperous life. All these things helps the country in boosting-up of the economy because the if
the citizens of the country are healthy then they can do their work with the great efficiency as a
result the national income and the GDP of the country get increase.
Maintain the Balance of payment- Balance of payment refers to directing and
controlling all the monetary transactions of the country for a particular time period (Chang,
2020). Most of the time it is calculated in every 3 months or at the end of each calender year.
Balance of payment can be improved by the help of the macroeconomics strategy so that it can
remain same for the long period.
Attain the economic growth- The next main objective of the macro economics is to
achieve the economic growth of the country. Macroeconomic helps the country to understand the
market accurately due to this activity the governments of the countries adopt the tools of
macroeconomic which are fiscal policy and monetary policy. These tools and methods helps the
country in boosting-up the economy of the country.
Equal Distribution of income- Macroeconomic study or analyse the market perfectly
due to this activity the country able to distribute their income among the people equally. This
objective is mainly concern on the distribution of the income among the rich and poor. The
deviation between the level of the rich and poor people must be very low so that the country
will remain at the great position in the world.
Economic system of UK
Before understanding the economic system of any country firstly understand the meaning of the
economy. Economic is consider as a term which include the study of production, manufacturing,
providing of goods and services in the market and utilisation of these goods and services called
economics (Chao, Tan and Wong, 2022). Now the its to understand the economic system it is
system which contains a several steps like producing of raw material, changing of that raw
material into finished product, packing of that finished product, then distributing of product in
the market and last consumption of that product by the consumer all these steps have to be done
in the geographical boundaries of the countries. Economic system are of three types and each
type have different features. The various types of economic system are social economic system,
capitalism economic system and last one is mixed economy system. The very first economic
system is social economic system this system is considered as traditional system because it is

adopted by the countries in the past. In this system all the power of the country of doing any kind
of business is only in the hand of the government. If any business man want to open their
business then they have to take the permission from the government and start the business. This
system was adopted by the government because the business man can exploit the interest of the
consumer (de Alencar, 2021). The next economic system is capitalism economic system in this
system all the power of the doing business is in the hand of private sector and due this power the
seller or manufacturer wants to sell the goods at the price from which they can get the maximum
profit. The last economic system which is used by the most of the countries in the present time is
mixed economy system in which all the power of doing business is distributed among the
government and private sector equally in which the private sector can generate the enough profit
from the market and and the government can also intervene in their operations if they exploit the
interest of the consumer.
Government make use of some macroeconomic policies for betterment of economic welfare.
There are several policies and approaches by the aid of which the countries are capable of
achieving economic welfare. Some of the approaches and policies for improvement in economic
welfare are stated as under:
 Monetary policy: It aids the nation in achieving the growth and expansion of economy.
The policy is observed to be fully monitored by the central banks in many countries.
They monitor the money supply in the territory. It takes the decisions related to rates of
banking institutions. It there is recession in country then the central bank would be
cutting the prices by which public would be getting money from banks at a very low rate.
As a outcome funds would be rotating in the marketplaces, demand for goods and
services would also rise (Greco, 2021). Central bank would do opposite when the
situation of inflation is prevailing in the market, in such situations prices are being
increase the reason being due to which public would be able to collect more money at a
higher rate of interest as well. As a result inflation in the territory could be controlled and
government authorities would be capable of achieving the welfare of economy.
 Fiscal policy: It aids in conditions of inflation and recession whereas such policies would
be in control of government. Fiscal policy might be expansionary or contractionary which
is used by governments when compared to contractionary. Expansionary policies aid in
period of recession where government would be imposing declined tax on consumers and

would start spending funds on social welfare so that the period of recession might be
impersonal. At the time period of contractionary policy it can be noted that it is being
utilised at the time period of inflation the reason being government declines its spending
on the welfare of community and it also leads to declining wages of political areas such
that money supply can be declined in the marketplaces.
 Heterodox approach: It aids the territory in maintaining the economy and also
improving the rate of employment such that target of enhancing national income could be
achieved in a successful manner.
How the economy of the United Kingdom can better acquire the success in the over 10 Years.
UK is one of the largest and strongest as well as developed country in the world and their
large part are covered by England. Population of the United Kingdom are fulfilling their needs
and living their life by maintaining the standard. There are two macroeconomic reason which
helps the country that are fiscal policy and monetary policy (Janssen and Ke, 2020). These policy
include several type of economic welfare few are listed below:
 Variation in rate of wages: It is most common thing in today time where people carried
same skills, knowledge and experience but they get less amount of salary from one
another. It is due to the economy of the business market of the location, region and
country. To overcome from this situation, country or business needs to develop its
planning or business forecasting by preferring macroeconomic factors.
 Gender Inequality: This type of problem are generally seen in the economy where people
discriminate each other not only by gender as well colour and caste (Kocourek, 2018).
The administration of the UK are planning in such a manner in terms of fiscal or
monetary policy to decline the discriminate factor from the country.
 Labour market condition: It is depended on the demand and supply in the market of
particular practices. If demand of the labour increases the economy of the country are
also increases. Similarly, if demand decreases the economy of the country are also
decreases.
 Gross Domestic Product and heath of the country: Every country regulates its own policy,
rules and regulation to run the economy smoothly (Wiese, H., 2021). They also consider
different types of accounting period for producing and distributing the goods and services

in the market that helps them to acquire more profit from the market as well as better the
health of the country that leads to increasing level of employment in the society.
 Maximize in financial involvement: It is developed with the help of availability of funds
in the country economy (Kolmar, 2022). It explains that every nation provide different
types of allowance to their population by providing them cheaper products in time. The
better finance or money availability is the main reason and macroeconomic factor that
affect the economic welfare as well as living standard of the population of that particular
reason.
In the below graph, Gross Domestic product of the UK country from last 10 year are expressed
with the help of specific line chart. This chart shows that country is maintaining their GDP from
2010 to 2020 without facing any obligation. But at the time of Covid-19 pandemic country hits
largely which impacted the country GDP rate. Form the past ten year UK also face several types
of challenges at the time of running the economy some are listed below.
Discussing the issues which the government of UK has been dealing with since last 10 years
In the following report it has already being discussed that UK territory is one of the competitive
and consist of strong economy in the whole globe (Koride and Gurtoo, 2019). But it also deals
with various issues since last 10 years for meeting the welfare and growth of the economy since
year 2008 which reflects poor development of efficiency, housing market of economy which

express higher rates and which would lead to inflation cost as well and production sectors as
well. Such are the challenges which can be controlled by the government authorities of UK since
past 10 years but there are certain big challenges which influence and affect the whole economy
of the nation which are being stated as under:
COVID-19 pandemic in world:the big issue and challenge which is being faced by the
government authorities of UK country at the time of managing the welfare of economy is the
global pandemic (Parker, 2019). At the time instance of pandemic most of the territories exploit
the policy of lockdown and all the firms and service related aspect have to complete their project
related tasks. Also it would express the companies and results of enterprises which would start
facing losses and issues while supporting and declining GDP and the national income of country
for the government of UK which is now capable of meeting the welfare of economy. According
to the accurate figures for the economy of UK the gross domestic product of the territory in the
year 2020 declined for about 10% in context of year 2019 GDP.
Brexit: Brexit is nothing but a name which is taken into consideration by UK at the time of
separation from the European country (Slade, 2019). It is made by two different words such as
Britain and exit. This event tool place on 31 January 2020 but before it took place, a public
voting was held on June 2016 by the UK government in which a question was asked in presence
of all citizens which was “Should UK remain a member of European union or leave”? And
541.89% of the citizens were observed for leaving the EU.
Bering a part of EU, UK got benefits in trade dealing with other nations the reason being
European union has a bargaining power and also have a large scale economy as a whole. So after
Brexit it was not easy for UK to deal in trading sector with other territories as other countries did
not agree in trading with them keeping old terms and conditions in mind. Another disadvantage
of Brexit is that now UK is not having any free trade based agreements with European countries
which as a result leaded them to pay all the custom duties and tariff which leaded to rise in cost
and decline in national income. Uncertainty of Brexit also led to confusions and chaos ion the
operation of business enterprise which would lead to discontinuation of operating function in a
industry. When the outcome of voting came the pound dropped to 31 year low. It also would be
affecting the decision of foreign investors who invest their funds in the marketplaces of UK. The
foreign investors further started withdrawing their money from the economy of UK. The foreign

direct investment fell by a percentage of 22 for the coming decade in the economy of UK due to
influence of Brexit.
The above diagram is showing the issues which are faced by the company from Brexit
and Covid-19 pandemic. Import and export sector or businesses are effected majorly. At that
time the prices of goods and services such as petrol or natural resources are also increases. The
country face problem of increasing unemployment rate and inflation rate in the economy.
Explaining the solution of the issues which are listed above:
To overcome from this global pandemic issues or other issues UK government regulate
numerous type of techniques that helps them to acquire the economic welfare.
Proper use of raw material and resources: It is one of the most solution which are adopt by the
United Kingdom government. Due to this the availability of raw material are increases as well as
increases the level of production and decline the cost that leads to maximize the rate of GDP that
effect the whole economy of the country (Spurr, 2019).
Contradiction of fiscal policy- The government of the country decreases the money supply in the
market during the time of Covid-19 pandemic and Brexit because at that time demand of
necessary goods and services are increases which increases the price of that goods and services
(Waldman, M. and Zax, O., 2020). As a result, the rate of inflation goes higher in the market to
control this rate government decline the supply of money by reducing the employees wages and

salaries. Due to this the demand of the product are decreases because people acquire less amount
of salary and pay. This practice also decreases the price of the commodity (Torras, 2018).
UK government also uses several types of ways to improve the GDP rate of the country such as
investing large amount of funds, by focusing on market forces and by disequilibrium corrections.
CONCLUSION
The above report describe the the concepts of macroeconomic by the help of the which
the countries maintain their stability. The two main methods of macroeconomics which helps the
country to maintain the economy are monetary policy and fiscal policy. In this report all the tools
and methods by the help of which UK government achieve their economic welfare in the last 10
years are mentioned. The UK government face the challenges like global pandemic and Brexit
in the past recent years which affect their growth very badly. Due to this the UK government was
not able to achieve their economic welfare in last few years. The solution of these challenges
also mentioned above in this report so that they can bring back the growth of the economy of the
country on right track. The economic condition of the last 10 year is explained by the help of the
charts. The approaches by the help of which the economic welfare of the country improve are
also mentioned above in the report. At last it is clearly understandable from above report is that
the macroeconomic is most important aspect for the economy of the country. Without micro-
economic concept and methods any country cannot be able to achieve the economic welfare.

REFERENCES
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