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Definition: This is a quantitative financial plan that outlines projected revenues and allocated expenditures over a specific period of time.

How does it affect the UK economy?

It can influence a range of economic channels such as:
Aggregate demand which is the total spending on all finished goods and services within the economy.
Inflation and Cost of Living which is the sustained increase in the rise of the price level of all goods and services over a period of time.
Economic Growth which is the increase in the output of all goods and services produced within a specific period of time.
Public Debt which is the total amount of money or credit a government owes to its creditors as a result of past borrowing.

Key Points

• 0% VAT rate on household electricity
• The government has announced £100 payment for households in council tax bands A to D in England.
• The National Living Wage will increase 3.9% from £12.71 to £13.21 per hour
• The government has extended the existing 5p per litre fuel duty cut until July 2027
• Banks will face a temporary increase in a corporation tax surcharge from 3% to 6%
• The government has announced an additional £1.5bn to help deliver around 10,000 social as well as affordable homes
• The office responsible for the budget predicts that the UK’s economic growth will rise by just 1% and inflation to be at 3.4% in 2027

There are many forms of unemployment and it is a major economic indicator.

Definition: a situation where a person of working age wants to work, is available to work, and is actively looking for a job but cannot find one

Why Unemployment Matters:
– Reflects Economic Health: Shows the gap between the number of people who want work and the actual jobs available.
– Influence Spending: High unemployment lowers consumer buying power, slowing down business growth
– Guides Policy: Central banks and governments track it closely to decide on interest rates and money supply rules.

Types of Unemployment:
Frictional – Temporary unemployment that occurs when workers are between jobs.
Structural – A mismatch between the skills worker possess and the skills demanded by employers.
Cyclical – Job losses caused by economic downturns or recessions. It changes with the business cycle and is driven by a drop in overall consumer and business demand.
Seasonal – Predictable job losses that occur at specific times of the year such as agricultural workers after harvest or staff at winter ski resorts

Recently, I entered the young economist of the year essay competition, a competition where candidates must answer a specific question based on the following: 

• Is a country truly wealthy if it has high GDP, but its citizens are unhappy?
• Free trade creates winners and losers — is it desirable?
• Should dynamic pricing be allowed for mega events like concerts/ gigs/ festivals/ sports finals?
• Should billionaires exist in a well-functioning economy?
• How will AI affect long run economic growth in developed countries? 

This taught me valuable skills such as analysing data from external articles, developing my own argument and coming to a judgement.

I chose to answer “How will AI affect long run economic growth in developed countries?”

Here is my submission: