Extract C: Growth of the world economy is set to slow in 2019 The International Monetary Fund has forecast that world growth will fall from 3.7% in 2018 to 1 3.5% in 2019, affecting the markets for UK exports. Increasing protectionism risks reducing investment and global trade flows. If all tariffs currently under consideration were implemented by all countries, they would affect about 5% of global trade. Growth in the US has remained strong but economic activity in the eurozone and China has been weaker than expected. With 5 continuing uncertainty regarding the UK's future relationship with the EU, a slowdown in the world economy is not good news for living standards in the UK. Exports are important for UK firms, for employment and people's incomes. However, since 2015, the pound has depreciated against most major currencies and this is expected to boost net trade and make a positive contribution to UK economic growth. 103 Figure 2: Income inequality 2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 Gini coefficient 0.347 0.342 0.337 0.333 0.326 0.322 Percentage of households in 22.85 23.54 22. 18 23.72 23.18 22.75 poverty * * Poverty = households with an income below 60% of the national median income. Source: ONS, 2019 Figure 3: Homelessness 2007 2009 2011 2013 2015 2017 Homeless households ** 99 510 64 890 76 270 82 640 85 450 86 050 Number of people sleeping on N/A N/A 2181 2414 3569 the street in 4751 England N/A = data not available ** Homeless households are those who are sleeping on the street, do not have rights to stay where they are, or who are living in unsuitable accommodation. Source: ONS, 2019 Figure 4: Life expectancy and the environment This source has been removed due to third-party copyright restrictions.A-level Economics A-level Economics X tent window Mark Scheme Examiner's Report Notes Resource Jestion INVESTIGATION Scenario You are an economist working for an organisation which investigates ways to improve the standard of living of UK citizens. You have been asked to review changes in living standards and inequality since the 2007-2008 financial crisis. As part of this investigation, you are to provide answers to the following question. Study Extracts A, B and C, and then use these and your knowledge of economics to help you answer this question. Explain how a sustained slowdown in the world economy is likely to affect living standards in the UK. - Economy doesn't [15 marks] grow past.Extract A: UK living standards since the 2007-2008 financial crisis The standard of living depends on the quantity and quality of the goods and services available o people but is also affected by their health and the environment in which they live. When measuring the economic wellbeing of a country, GDP is the most commonly used indicator. Recent data show that the UK's economy is now 11% larger than it was in the second quarter of 5 2008. However, real GDP per capita is just 2.9% above its pre-financial crisis peak, whereas in the 50 years leading up to the financial crisis, growth in real GDP per capita averaged 2.4% per year. On the other hand, unemployment, at 4.0%, is at its lowest rate since 1975. Immediately after the financial crisis, the recovery in employment was driven by the growth in part-time work and 10 self-employment, but recent gains have been more broadly based. Full-time roles comprise 44% of the jobs created since the start of the recession in 2008. In real terms, average weekly earnings are still $15 below the pre-crisis peak, but the introduction of the National Living Wage in April 2016 has helped to boost the earnings of the lowest wage earners. The bottom 40% of the earnings distribution saw their real earnings grow 15 between 2016-2017 and 2017-2018, whereas the top 60% saw their real earnings fall. Since 2010, the value of the old-age state pension has been protected and, in real terms, it has risen by 9%. In contrast, over the same period, welfare spending per working-age adult and child has fallen by almost 11% in real terms. Extract B: Selected indicators of UK living standards Figure 1: National income and employment 2007 2009 2011 2013 2015 2017 Index of real GDP 91.3 87.1 90.1 93.2 98.2 2016 = 100 101.8 Real GDP per capita (E) 29 324 27 558 28 030 28 646 29 717 30 367 Real household disposable 19 685 income per capita 20 164 19 143 19 544 20 450 20 138 Unemployment rate (%) 5.3 7.6 8.1 7.6 5.4 4.4 Average hours worked per week (full-time workers) 37.2 36.8 37.0 37.5 37.4 37.4 Figure 2: Income inequality 2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 Gini coefficient 0.347 0.342 0.337 0.333 0.326 0.322 Percentage of households in poverty * 22.85 23.54 22.18 23.72 23.18 22.75 Poverty = households with an income below 60% of the national median income