Hey all, here are your weekly updates on the UK and Global Economies

UK Economy

• UK foreign secretary David Lammy has vowed to free up £2.3bn held from the sale of Chelsea Football Club by Russian billionaire Roman Abramovich more than two years ago (this could be spent on infrastructure)
• In just the first two months of 2025, the cost to consumers of dealing with Britain’s inefficient electricity system topped £250m (should the government intervene? Are electricity firms too strong?

Global Economy

• 36 companies account for half of global emissions
• Euro has climbed 4.5% against the dollar this wek
•  Berlin is on the brink of relaxing its “debt brake” rule to pave the way for spending on defence and infrastructure worth an additional €1tn over the coming decade.

Click here for 160 more A* real world examples

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This week's A* Essay Plan: Evaluate the effects of volatile prices (25)

Micro) Lower profits for firms. Fluctuating prices reduce animal spirits (the confidence of investors and consumers), leading to less investment. This means that capital begins to depreciate (e.g. failing to replace or repair machinery, causing it to become more inefficient) and costs begin to rise, shifting AC and MC up -> profits fall -> less money to spend on R&D -> quality of products decrease -> less demand -> further decreases in profits.

Eval) Buffer stock and Fairtrade schemes ensure that farmers get a minimum price -> this means that they know the minimum income they will receive monthly, giving them confidence to invest. Investments into new capital ->- costs fall -> profits increase.

Macro) Fall in prices (volatile prices go up very high and down very low) -> Terms of trade worsen -> fall in export revenue. UK will also continue to import (we have relatively inelastic demand for imports), imports are a withdrawal from the circular flow of income -> x-m falls -> AD shifts inwards -> Real GDP decreases. 

Fall in prices also means government revenue is low as there is more unemployment -> government debt gets larger -> larger servicing costs and increased opportunity cost -> government now spends less on welfare or supply-side policies. 

Eval) The government may have diversified the economy before the volatile prices. Think of Rwanda, the government there is investing heavily into Visit Rwanda tourism programme to prevent the negative effects of volatile prices. The UK’s economy is quite diversified, volatile prices in agriculture or imports may not affect our tourism sector or financial services and we will continue to grow.

For 25 more essay plans click here