Economic indicators:


This paper discusses the various economic indicators which include the GDP, Inflation and Employment. It also highlights the trends in these indicators in the UK for the period 2006 to 2009. These values are important in that they aid in decision making, they are also used to compare these values with values of other countries and to compare changes over time.


According to Hardwick (2002) the level of GDP is a measure of all products that are produced in a country, this value indicates the total output in an economy, there are different ways in which this value is determined and they include value added method and expenditure method. The value is important in that it helps indicate the performance of a country, and values are used to compare a countries performance over time and also used to compare with other countries.

The following chart indicates the changes in GDP in the UK. Data was retrieved from national statistics UK (2010) available at

The chart shows that the GDP level has increased over the past 3 years. However GDP remained constant in the first and second quarter of 2009.

Economic Indicators


Inflation is determined using the consumer price index, Hardwick (2002) states that it indicates the changes in prices in an economy for selected consumer goods. Inflation is also defined as the persistent rise in prices of products in the economy. Policy makers will implement policies that will check inflation by increasing interest rates. Inflation leads to an increase in the cost of products in the economy and therefore is an important economic indicator. The following chart indicates consumer priced index in the UK, data was retrieved from national statistics UK (2010) available at

From the chart above the CPI level has increased over the years, however there was a decline in inflation for the period July 2008 to January 2009 and the CPI level increased for the period January 2009 to December 2009. The trend in the chart shows that the CPI level will continue to increase in future.


Employment refers to the level of employment in an economy, it is an important indicator given that the level of employment will determine per capita income and output, when employment is high then per capita income is likely to be high, the level of employment is indicated by the unemployment rate, the chart below indicates the level of unemployment in the UK, data was retrieved from National Statistics UK (2010) available at TSDdownload1.asp

Economic Indicators

From the chart it is evident that unemployment rate dropped for the period march 2007 to may 2008, this rate increased at an increasing rate for the period 2008 July to December 2008, this indicates that for the period 2008 to 2009 the economy experienced high unemployment rate, unemployment rate is an important measure that will aid in decision making, according to the Phillips curve the relationship between inflation and unemployment is inverse, therefore high inflation according to this theory will mean that there is high employment in the economy, policy measures to increase employment therefore will lead to an increase in inflation. Hardwick (2002)


The above discussion focuses on three major economic indicators namely GD{P, employment and inflation, these three indicators are related whereby an increase in one value will affect the other value, for example policy measures to increase employment will lead to increased inflation according to the Phillips curve. Therefore these values are important in policy making and when comparing the performance of an economy over time.


Hardwick, P. (2002) Introduction to modern economics, New  Jersey: prentice hall.

National statistics UK (2010) GDP, Employment and CPI data, retrieved on 6th February, from