There are many changes in the UK's economic climate that affect the business environment. Measuring the economic environment and its position in the economic business cycle is not an exact science. The state of the economy can be measured using a number of economic indicators, such as unemployment. These can be used to judge the current state of the economy. To judge the position of the economy on the economic business cycle we need to consider the trend or pattern of these indicators. .
In addition to the usual uncertainty and differences in interpretation, it is likely that the UK will join the Euro in the near future. This will, in its own right, have a significant effect on the economy. This paper will aim to discuss the potential impacts of these events. .
The Condition of the UK Economy .
The main economic indicators to be discussed are economic growth (change in GDP), unemployment/employment level, inflation, public sector borrowing and interest rates.
Since 1997 UK GDP growth has been more stable than any other G8 country. GDP growth slipped in 2001-03 as the global downturn, the high value of the pound, and the bursting of the "new economy" bubble hurt manufacturing and exports. However, the economy is still one of the strongest in Europe. According to a survey of independent UK economists released by the Treasury, Britain's economy grew by 2.1% in 2003, up from the 1.7% rate of the previous year. GDP has remained stable with a growth average just over 2% for the last few years.
Unemployment levels in the UK have fallen to 3.0% and the number of people in employment have reached an all time high with 1.7 million more people in employment since 1997. According to a survey completed by the ILO, unemployment fell by 33,000 people to 1.47 million, with the claimant count remaining under 1 million (908,200). However, the manufacturing industry took a hit, falling by 120,000 even though productivity levels rose in 2003.