Explain how a global slowdown can affect employment in the UK

AQA AS-Level Paper 2 June 2022 Insert

Extract B (line 2) states: ‘…there were signs that economies were in the midst of a global slowdown’. Explain how a global slowdown can affect employment in the UK. (10 marks)

1. A global slowdown is likely to cause unemployment to increase in the UK.
2. Unemployment is when people are willing and able to work but cannot find a job.
3. In particular, cyclical unemployment is the most likely to increase as it is caused when there is a lack of aggregate demand in the economy during a recession.
4. Extract B mentions signs of 'a global slowdown' even before the pandemic, and it mentioned that 'growth rates were disappointing'.
5. Extract A also shows that growth rates in the UK have fallen from 2.4% in 2015 to 1.4% in 2019.
6. The extract mentions that countries like the UK might suffer from a fall in exports because of US tariffs (line 6).
7. It also mentions falling levels of business confidence and investment.
8. AD = C + I + G + (X-M).
9. Exports and investment are both components of aggregate demand (AD), which means that AD is likely to fall, as shown in the diagram below.
10. This leads to a fall in real gdp, as shown from y1 to y2, suggesting that there will be a fall in the output produced by UK firms.
11. This leads to a decrease in the derived demand for workers, which will lead to firms making more staff redundant, causing unemployment to increase.

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