Economic instability 2

Sustainable growth is difficult to achieve

Sustainable economic growth means making sure the economy keeps growing without causing problems for future generations

Sustainable growth relies on a country’s ability to:

Expand output every year

Find a continuous supply of raw materials, land labour etc. to continue production

Find growing markets for the increased output, so it’s always being bought

Reduce negative externalities e.g. pollution, to an acceptable level so they don’t hamper production

Do all of the things above at the same time as many other countries who are pursuing the same objectives

It is very difficult for a country to do all of these things at the same time, so sustainable growth is hard to achieve

To be able to achieve sustainable growth, countries will need to develop renewable resources - non- renewable resources will run out and, for growth to be sustainable, a continuous supply of raw materials is necessary

Countries will also need to innovate to create new technologies that reduce negative externalities, such as pollution, and the degradation of resources, such as land or rivers, without stopping output from expanding

A country that achieves sustainable growth will gain long term benefits to society - it can more easily plan ahead since it can be more confident about it’s long term economic prospects

UK’s recent macroeconomic performance

From 2000 until 2008 the UK enjoyed continuous GDP growth of, an average, just under 3% each year. However in 2008, the UK went into a recession that lasted for several months and was followed by a long slow recovery

During the recovery the UK economy went through several short bursts of growth followed by slow-downs - almost went back into a recession in 2012. From 2013 onwards, the UK has had much more consistent GDP growth and, by 2014, GDP returned to the level it was just before the recession- suggesting that recovery is complete

Between 2000 and 2015 the rate of inflation as measured by the consumer price index has been quite steady- generally inflation has been between 0.5% and 3%

The UK has had a current account deficit in it;s balance of payments for the whole period between 1984 and 2014- the deficit was at it’s largest during this period towards the end of 2014