COSTS AND PRICES

COSTS AND

PRICES

DEMAND

MONEY & FINANCIAL MARKETS

LABOUR MARKET

OVERALL SUMMARY

PRESENTED BY:

EDWARD KENNY – COSTS AND PRICESLUKE JONES – DEMANDDAVID HULSE – MONEY AND

FINANCIAL MARKETS SCOTT WATSON – LABOUR MARKET

WIRRAL GRAMMAR SCHOOL FOR BOYS

TARGET 2.0 TEAM

COSTS AND PRICES

PRESENTED BY:

• Oil Prices• Gas Prices• Food Prices

• VAT• CPI

• Producer Prices

This Section Covers:

EDWARD KENNYWirral

Grammar School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Oil price hits six-month high of $83.45

• “Oil price to continue to rise” (Ali Al-Nuami; 01/11/10)

Oil Prices

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

WirralGrammar

School

• 2008 – 50% increase• 7% price rise pending in January• 25% cost increase

Gas prices

COSTS AND

PRICES

DEMAND


LABOUR MARKET

• Recent sharp rises in food prices do not point to a repeat of the food price spike in 2007-8 (UN's Food and Agriculture Organization; 24/09/10)

Wheat prices soar causing price spike scare

Food prices

OVERALL SUMMARY

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

VAT

OVERALL SUMMARY

Last time VAT was increased it was only a short term increaseIt only lasted four months.

1991 CPI Great Britain

Rise in VAT in Jan 2011 of 2.5% from 17.5% to 20%Direct inflationary pressure on the economy

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

CPI

Causes of fluctuationRecessionCompare with RPIHouse price changes

OVERALL SUMMARY

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

Producer PricesOutput price inflation 4.4 per cent in September.

Input price annual inflation rose 9.5 per cent in September compared to a rise of 8.7 per cent in August.

Month on month the input prices up 0.3 per cent between August and September.

OVERALL SUMMARY

WirralGrammar

School

SummaryDEMAND

PRESENTED BY:

•Property Market• GDP

•Consumer Spending•Exports


LUKE JONES

COSTS AND

PRICES

DEMAND


LABOUR MARKET

Energy Prices rising causing inflationary pressure

Food prices increasing also causing inflationary pressure

CPI stabilising above 2.0% target

Input prices stabilising and so are output prices

Therefore on the whole, hold interest rates with a scope to increase

OVERALL SUMMARY

WirralGrammar

School

Infl

ati

on

ary

P

ressu

res

COSTS AND

PRICES

DEMAND


LABOUR MARKET

Property Market

OVERALL SUMMARY

WirralGrammar

School

Top economists believe that by the end of 2011 growth will be secured and the property market will

pick up again.

UK construction has suffered a 14% fall between April and August.

COSTS AND

PRICES

DEMAND


LABOUR MARKET

GDP

OVERALL SUMMARY

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

WirralGrammar

School

Consumer SpendingUK Domestic demand has increased by 11% since

2009, but now...

£90bn government spending cuts; job prospects worsening; consumer confidence suffering

The average UK household had only £131 a week of discretionary spend in February,

9.2 % less than the previous year

COSTS AND

PRICES

DEMAND


LABOUR MARKET

ExportsManufacturing in the UK up from -14% Y.O.Y. In 2009.

To 5% Y.O.Y. In 2010.

Due to UK exports, of premium nature gaining popularity in

developing economies. Scotch Whisky exports up 17%.

OVERALL SUMMARY

WirralGrammar

School

MONEY AND FINANCIAL MARKETS

PRESENTED BY:Consumer confidence worsening

House prices and construction troughed; may

not recover until 2011

High-street suffering; reduced disposable income

Despite this, AD stimulated by exports to the East...

Hold rates at 0.5%; no QE, allowing scope.

• Quantitative Easing• Stock Markets• Exchange Rates


DAVID HULSE

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Summary

WirralGrammar

School

Infl

ati

on

ar

y

Pre

ssu

res

Defl

ati

on

ar

y

Pre

ssu

res

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Quantitative Easing

-Intention to stimulate investment

-UK strategy currently paused at £200bn

- Americans introducing an additional US$600bn

- Knock-on effects around the world

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

FTSE 100 – 3 year trend

Peak 10th December 2007 – 6,568

Trough 3rd March 2009 – 3,518

Currently recoverin

g and predicte

d to remain

between 5500-5600

Stock Markets

OVERALL SUMMARY

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

Risen from 1.43 to 1.60 over the last six months

Overall trend is slightly decreasing – 1.64 down to 1.60 over the whole period

Exchange Rates

OVERALL SUMMARY

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

General trend over the period is increasing – from 1.11 to 1.15

6 month period – 1.15 to 1.14

Exchange Rates

OVERALL SUMMARY

WirralGrammar

School

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

The pound per dollar is expected to experience a steady rise into 2011

The pound per Euro is expected to experience a steady drop to .75 by 2012

Exchange Rates

WirralGrammar

School

• Unemployment• Employment• Productivity

• Earnings Growth

LABOUR MARKET

PRESENTED BY:


SCOTT WATSON

COSTS AND

PRICES

DEMAND


LABOUR MARKET

Summary

OVERALL SUMMARY

WirralGrammar

School

Increased Confidence

Investment levels increasing

Strength of the £

International Uncertainty

Infl

ati

on

ar

y

Pre

ssu

res

Defl

ati

on

ar

y

Pre

ssu

res

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Unemployment

WirralGrammar

School

●Unemployment - 2.47 Million

● Decline of available jobs

●Companies strive for productive efficiency

●Deflationary effect as consumer spending is lowered

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Employment

WirralGrammar

School

●Spending cuts and VAT rise

Cuts to cost estimated 1.6 million jobs

900 000 private sector jobs could go.

inevitable public sector job cuts

sharp increase in part time jobs as apposed to full time jobs

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Productivity

WirralGrammar

School

The growth of GDP per hour worked is highest for the UK

Relative to other countries the UK is becoming more productive

Therefore lower costs relatively and more appealing exports

This is an Inflationary pressure

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

Earnings Growth

This is below the rate of inflation at the moment meaning that people have less disposable income , which means lower consumer spending and as a result is a deflationary pressure

Here we can see that the average earnings of employees has risen by 2.0 %

WirralGrammar

School

OVERALL SUMMARY

Infl

ati

on

ar

y

Pre

ssu

res -25% devaluation of the £ - Since Mid-

2007

- Increasing food, commodity & energy prices

- VAT to 20% in January

Defl

ati

on

ary

P

ressu

res - Spare capacity – 7.7%

unemployment

- Fiscal Tightening

- International Uncertainty

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

SummaryThe future shows no signs of improvement due to events such as spending cuts and a rise in vat

We can that there are mainly deflationary pressures in the form of:● Unemployment● Earnings growth

●As opposed to the inflationary pressure of increased productivity

WirralGrammar

School

Infl

ati

on

ar

y

Pre

ssu

res

Defl

ati

on

ar

y

Pre

ssu

res

COSTS AND

PRICES

DEMAND


LABOUR MARKET

OVERALL SUMMARY

WirralGrammar

School

I N T E R E S T R A T E S 0 . 5 %

Q U A N T A T I V E E A S I N G £ 5 0 B I L L I O N

THANK YOU FOR LISTENING

WirralGrammar

School

Documents

COSTS AND PRICES