Managing the Economy Research Paper Example | Topics and Well Written Essays - 1500 words

Managing the Economy - Research Paper Example Basic Income Tax Rate (% points) 23.0 23.0 23.0 23.0 23.0 Real Income Tax Allows (Index, 1995=100) 100.0 100.0 100.0 100.0 100.0 VAT Rate (% points) 17.5 17.5 17.5 17.5 17.5 Employers NICs Rate (% points) 10.0 10.0 10.0 10.0 10.0 Interest Rates (% points) 6.2 6.0 6.0 5.4 4.1 Real Unemp. Benefits (Index 1995=100) 100.0 100.0 100.0 100.0 100.0 DM / Exchange Rate 2.67 2.63 2.58 2.55 2.55 SETTING OF MAIN POLICY INSTRUMENTS IN THE REVISED FORECAST 1999 2000 2001 2002 2003 Govt Capital Expdt ( bn,1995 prices) 10.1 11.2 12.7 14.4 15.0 Govt Current Expdt ( bn,1995 prices) 149.7 152.4 155.8 159.4 162.0 Basic Income Tax Rate (% points) 23.0 23.0 23.0 23.0 23.0 Real Income Tax Allows (Index, 1995=100) 100.0 100.0 100.0 100.0 100.0 VAT Rate (% points) 17.5 17.5 17.5 17.5 17.5 Employers NICs Rate (% points) 10.0 10.0 10.0 10.0 10.0 Interest Rates (% points) 6.2 6.0 6.0 5.4 4.1 Real Unemp. Benefits (Index 1995=100) 100.0 100.0 100.0 100.0 100.0 There is no change made in the Main policy instruments between the base forecast and the revised ones. This is the effect of the changes to the assumptions which has been made. 1999 2000 2001 2002 2003 GDP (growth, % pa) -1.1 -2.0 -1.1 -0.0...High growth rates and high inflation rates go together. All these are the result of the rise in Oil price which is almost three times in the first two years of reckoning and more than twice in the next three years. The effect of these interlinked parameters has an impact on the other economic performances. Analysis: The GDP growth shows a negative figure due to the steep increase in the world oil price and in the substantial decrease in the rate of growth of the World trade (0.8%) during 1999. The figures saw themselves stabilizing during the subsequent period in 2000 with a growth rate of 3% which made the GDP growth rate 0. With a lowered growth rate, during the 1999 and 2000 this can be seen as a period of recession and the rest of the period from 2000 to 2003, there is a slow regaining resulting in lowering of the unemployment by the end of 2003. Inflationary tendency in the market comes down over this regaining period beyond 2000 while the earnings go up as indicated by the earnings inflation figure which shows an increase towards the end of the period. Current account holding has come down while at the same time, the strengthening of the DM indicates an advantage trade situation for sterling towards export of commodities and services rather than import of these services. i) A negative GDP growth rate was noticed in the earlier cases.