How Does Inflation Affect Uk Business

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Inflation and Unemployment Effects on UK Businesses on 2014 Macroeconomic factors like inflation and unemployment are considered as a top-down approach that portrays the bigger picture of the functioning of the whole economy. In every region, it is the macroeconomic factors that determine the manner of operation of the economy with stability in these factors indicating economic stability and an unstable condition of the factors equally leading to poor performance of the overall economy. The paper examines how inflation and unemployment affected businesses in the UK in 2014. Despite 2014 recording the lowest ever levels of inflation since the time of global financial crisis in 2009 with a decline of 1.6 percent, the effects of the inflation …show more content…

It is, however, important to note that the higher the numbers of persons are employed within a nation, the higher the purchasing power parity of the people of such a nation increases. After the 2009 global crisis, unemployment levels hit a significant high in the ensuing years as companies worried to push further investments in the market. From 2010 to 2012, unemployment rates stood at 7 per cent to eight per cent (Flanders, 2012). Beginning of 2013 saw a decline in unemployment levels with a further decline evidenced from 6.6 percent to 6.5 percent in 2014. Towards the end of 2014, statistics indicated that around seventy-eight percent of men were employed with the rate of women employed standing at sixty-eight per cent that in total yields a total employment rate of 73.1 percent. Despite the rise in employment levels recorded, businesses failed to register significant benefits with the major cause of failure in consumer spending attributed to low wage growth. With wage rates growth at 0.3%, the level of consumer spending is equally affected that as a result leads to a decline in consumer spending. Furthermore, failure of decline in interest rates affects the level of income with banks the most affected businesses in 2014 (McVey, 2014). The reduced rise in wage rates indicates a decline in consumer spending with savings facing a …show more content…

(2014, December 27). How does inflation affect a business? - Telegraph. Retrieved from http://www.telegraph.co.uk/sponsored/business/sme-home/news/10841654/low-inflation-business.html Flanders, S. (2012, January 18). UK unemployment increases by 118,000 to 2.69m - BBC News. Retrieved from http://www.bbc.com/news/business-16608394 McVey, E. (2014). UK unemployment falls to six-year low of 2.12m - BBC News. Retrieved from http://www.bbc.com/news/business-28325361 Simon. (2014, November 18). UK inflation rate rises to 1.3%: How will it affect you? - Business Comment - Business - The Independent. Retrieved from

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