Introduction
Economic performance varies between countries owing to various factors. Such factors include resources endowment, level of development, education as well as economic policies. In that view, those factors results to differences in macroeconomics factors that act as the performance measures and indicators. Thus, comparing macroeconomic performance between countries offers a view of the country with better growth and opportunities. To demonstrate the differences, this analysis compares macroeconomic performance of Scotland and England by analyzing their macroeconomic variables over the period beginning the year 2009 to 2013. The analysis is done with two approaches; level comparison and trend analysis.
Analysis
The crucial macroeconomic variables that measure an economic performance include GDP, Employment, Interest rate, net exports, inflation and exchange rate among others. The variables provide an overview of the economy’s status and an analysis over a period provides a view of the performance trend. In addition, comparison of the macroeconomic numbers between countries provides an overview of individual economy performance relative to the other. In that respect, the following is a summary of the comparison and trend analysis of Scotland and England’s macroeconomic variables covering GDP, employment rate and interest rate.
- GDP
The variable represents the value of all services and finished goods produced within a country. The variable covers public and private consumption, investments, government outlays as well as net exports calculated on an annual basis. Higher GDP values are an indication of a larger economy while rising values over time are an indication of an improving overall economy. The values for the two economies over the five years are as follows.
Source: (UK Public Spending, 2014)
On the other hand, growth rate measures the rate of change in the GDP measuring how well a country is performing in expanding its economy over time. The two countries growth over the five years is as shown below.
The GDP growth rate for the two economies shows that the two countries experienced fluctuating growth over the period.
- Employment rate
Employment rate is the measure of the portion of the population engaged in employment. The variable is an indicator of the economies productivity and growth potential as it greatly determines the level of disposable income. Thus, higher employment rate is an indication of better performance, and a rising rate is desirable. On the other hand, low employment or decreasing rate is not suitable as it is an indication of falling disposable income in the economy. For the Scotland and England, employment rate accounts for those aged between 16 and 64 years. In that view, the employment rates for period begging 2009 are summarized as follows.
Source: (UK Government, 2014)
The two countries have had relatively the same employment level over the five years with a slight difference. However, the two experienced a decrease in the employment rate from the year 2009 to 2011 but experienced a recovery to the 2013 significantly higher levels. On the other hand, Scotland had had the highest rate between the two for the years excluding 2012 when England had a higher rate. Scotland enjoys a better employment status having the highest employment rate among the four UK countries. However, the rate decreasing for the two countries to the year 2011 was a result of challenging economic conditions that faced the UK economy. Thus, an increase in employment from 2012 was an indication of a recovering regional economy that boosted job opportunities. (London Councils, 2014)
Top explain the trend and comparison in the employment rates, the following qualifications levels summarizes the situation. The following table the percentage of the population aged between 16 and 64 with level 3 SVQ qualifications
The following table shows the percentage of the population aged 16 to 64 with level 4 SVQ qualifications
The two tables’ shows that Scotland has had the highest level of qualified population that is viable for employment. That explains the reason the country has had a higher employment rate compared to England. (Scottish Government, 2014)
- Interest rate
Interest rates reflect the cost of borrowing in the economy. The two economies cost of borrowing can be summarized as follows. Higher interest rates reflect the higher cost of capital thus unsuitable for economic growth. On the other hand, low-interest rate is suitable for enhancing borrowing that could enhance economic growth.
Source: (Bank of England, 2014)
The UK national monetary authority is responsible for determining the regional economy’s interest rate. In that respect, the two economies have had a constant rate of 0.5 for the five years as determined by the Bank of England that acts as the monetary authority. In that respect, the two countries experienced stability in the cost of borrowing as resulting from the measures by the monetary authority to prevent a surge in borrowing cost that could have added to the economic challenges facing the economies.
Summary
Given the macroeconomics trend analysis and comparison between the countries, it is clear that the UK regional economies experienced an economic decline from the year 2009 to 2011 and then began a recovery path in 2012. That is indicated by the trend in employment and GDP growth rates for the two countries. Thus, the global economic challenges reflected by tight credit, falling home prices and economic slowdown accounts for the declining performance to the year 2011 beginning from the year 2008 when the global economy experienced a recession. (ONS, 2014b)
However, the slowdown pushed the UK government to implement a number of measures that stimulated the economy. That involved measures like partial nationalization of the banking system, capital expenditure increase, cutting taxes as well as suspending public sector borrowing rules. The measures also included the monetary authority measures to maintain financial market stability through interest rate stabilization and money supply control. In conclusion, the fluctuation of the two economies macroeconomic performance over the five years is a reflection of the UK economic environment and national government policies. On the other hand, the differences in their performance owe to the countries resources and skills as well as individual policies. (CIA, 2014)
References
Bank of England. (2014). Monetary policy. Retrieved from,
http://www.bankofengland.co.uk/monetarypolicy/decisions.htm
CIA. (2014). The World Fact book: United Kingdom. Retrieved from,
http://www.ciaworldfactbook.us/europe/uk.html
London Councils. (2014). London Key Facts. Retrieved from,
http://www.londoncouncils.gov.uk/londonfacts/default.htm?category=7
Office for National Statistics. (2014a). UK Regions and Countries Recovering from
the Economic Downturn. http://www.ons.gov.uk/ons/rel/regional-trends/regional-economic-indicators/july-2014/sst-region-economic-indicators.html
Office for National Statistics. (2014b). London's economy has outperformed other regions
Since 2007. Retrieved from, http://www.ons.gov.uk/ons/rel/regional-trends/regional-economic-indicators/march-2013/sum-london.html
Scottish Government. (2014). Scotland's Foundations. Retrieved from,
http://www.scotland.gov.uk/Publications/2013/05/4084/4
UK Government. (2014). Employment rate. Retrieved from,
http://www.statistics.gov.uk/OnlineProducts/LMS_FR_HS.asp
UK Public Spending. (2014). Gross Domestic Product. Retrieved from,
ww.ukpublicspending.co.uk/spending_chart_2007_2013ENm_14c1li011mcn__UK_Gross_Domestic_Product_GDP_History
