15 years: Macroeconomist
In this video, Cyrille provides an overview of the UK economic outlook, focusing on two issues: inflation and the labour market. He outlines what is currently driving up inflation, and what options the Bank of England has to keep inflation under control.
In this video, Cyrille provides an overview of the UK economic outlook, focusing on two issues: inflation and the labour market. He outlines what is currently driving up inflation, and what options the Bank of England has to keep inflation under control.
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12 mins 7 secs
In this video Cyrille will provide an overview of the UK economic outlook, focusing on two issues: inflation and the labour market. He explains what is currently driving up inflation, and what options the Bank of England has to keep inflation under control. On the labour market, Cyrille explains why there are labour shortages in some sectors at the same time as nearly 2 millions of workers are still in furlough.
Key learning objectives:
The current state of the UK’s economic recovery
The rising inflation and its effect on the recovery
Actions that Bank of England can take to prevent inflation
Mismatch between jobs needed to boost recovery efforts and availability of workers with required skill set
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While the UK economy is yet to return to its pre-COVID levels, it has certainly shown signs of recovery and is doing so at a good pace. Some sectors are indeed doing better than others, with output expected to reach pre-COVID levels in the first quarter of 2022. The forecast for GDP growth in 2022 has been increased from 4.5% to 5.3% in August 2021.
Despite the increasing cases in the summer and autumn, owing to the delta variant, the UK economic recovery is not expected to be impacted by it severely. This is in light of the fact that as of August 11th, over 75% of adults in the UK have had both vaccine doses.
The labour market has been very resilient and throughout winter 2020/21 unemployment stayed below 5%. The furlough scheme certainly helped keeping this low but increasing reports of labour shortages in certain industries highlights the obstacles in recovery.
The number of economically active people declined by 450,000 in 2020 and this was also due to Brexit and a large number of Eu citizens leaving the country. Industries such as healthcare, transport, construction have labour shortage whilst some like food, accomodation have excess.
While there are a lot of people on furlough, a significant proportion of them may not have the skills required in the post-pandemic economy. Businesses that are facing shortages find it difficult to attract people with the right skills because the businesses that are growing are not necessarily the same businesses that made large use of furlough. Also increasing digitisation has changed skills required in the labour market).
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