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Macro-economy The wider, general economic environment can be defined as a system that attempts to solve the basic “economic problem” – resources are limited, human wants are infinite. All organisations including the University of Durham, DU On Fitness are affected directly and indirectly by the macro-economy. The following is a report outlining the past, present and forecast state of the macro-economy. I will concentrate on three main government objectives; INFLATION (Retail price Index %) GDP GROWTH (%) CLAIMANT UNEMPLOYMENT (%) For each I will evaluate the likely effects on DU On Fitness at present and in the future. Each objective will be compared to observe changes from 1998 – 2002 and I will also evaluate the forecast through to 2005. Inflation Inflation is said to be a “general rise in prices across the economy”. “RPI is a key indicator in the progress of the economy, and is indirectly used to calculate quarterly consumer spending on retail goods and the output of the retail sector” – (www.guardian.co.uk) State of Inflation as at January 1998 – January 1999 Please Note: All of my figures are shown as averages. January 1999 December 1998 Lowest Highest Inflation Rate 1.5 1.6 0.5 3.1 Exc. MIP’s 2.2 2.3 1.1 3.1 As you can see in the above table, I have shown inflation as a whole and excluding Mortgage Interest Payments. Although MIP’s are important in terms of household expenditure it is beneficial to show both because an increase in interest rates designed to reduce inflation would have the perverse effect of initially resulting in a rise in inflation. (www.bankofengland.co.uk) The graph below shows the above figures and also includes averages throughout the year. As we can see from looking at the above graph inflation, in general, dropped 0.2% between January 98 and March 98. It then remained at 2.4% for 4 months before falling again and reaching a low of 1.5 in January 1999. State of inflation as at January 2000 – January 2001 January 2001 December 2000 Lowest Highest Inflation Rate 2.9 2.9 1.8 4.2 Exc. MIP’s 2.2 2.3 1.6 3.0 Again, the graph below shows the above averages including the averages throughout the year. The above graph shows that in April 2000 inflation rates overall and excluding MIP’s were the same at 2.2%. If we compare this to the previous year we can see that there was a difference of 0.2% in April. According to www.statistics.gov.uk the current RPI (rate of inflation) is 1.2% generally and 2.2% excluding MIP’s. The red crosses on the previous two graphs can show these figures.
Approximate Word count = 1668
Approximate Pages = 6.7
(250 words per page double spaced)
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