1.5.4 The economy and business
The impact of the economic climate on businesses:
● unemployment, changing levels of consumer income, inflation, changes in interest rates, government taxation, changes in exchange rates.
● unemployment, changing levels of consumer income, inflation, changes in interest rates, government taxation, changes in exchange rates.
GDP, average income & Unemployment
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Watch the theory video on what the key terms mean and how the terms are interconnected.
GCSE GDP theory
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Explain the impact of an increase in GDP/average income/employment for a business? (Section A - 3/6 marks)
GDP section A analysis
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Explain how the data in the two graphs are correlated?
Section B/C: GDP in context
What happened to GDP in the UK in 2008/09?
What does this mean and why is it important to know?
Where would you prefer to sell given the data, China or the UK?
What does this mean and why is it important to know?
Where would you prefer to sell given the data, China or the UK?
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Assess how a recession could impact a second hand car dealer? (6 marks)
recession guaranteed to be deeper as car sales dive by 45%. UK US Germany and Japan hit
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Assess how China's GDP growth has impacted Lego? (6 marks)
LEGO plans to build on its success in China
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Inflation
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What is meant by inflation?
GCSE Inflation theory
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Explain how inflation can impact a business? (Section A - 6 marks)
Inflation section A
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Section B/C: GDP in context
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Assess the impact of inflation on small chocolate sellers? (6 marks)
Chocolate prices on the rise
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Assess the impact of Toblerone's decision to change the shape of its bar? (6 marks)
Toblerone changed the shape of its chocolate bars so now everyone gets less chocolate - TomoNews
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Interest Rates
What is meant by interest rates? What are the two things you can do at a bank which are influenced by interest rates?
How will changes in the interest rate influence a business possible directly on indirectly?
How will changes in the interest rate influence a business possible directly on indirectly?
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What does the interest rate rise tell us about the health of the economy? - BBC Newsnight
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Government Tax
There are 3 main types of tax in the UK - do you know what they are?
How will this influence businesses?
How will this influence businesses?
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Calculate the income tax the average person would pay?
What income tax would you need to pay for your dream job? 
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VATWhat is it?
Why is it important to a business? A Cake or a Biscuit? - The Lengthy and Expensive Saga of the Jaffa Cake
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Industry chiefs fear hundreds of fryers up and down the country may have had their chips if a hard-fought battle to scrap the current 20% level of tax is unsuccessful.
There have already been two failed attempts in British courts to win a zero VAT rating for fish suppers. Now accountancy firm KPMG, which is helping chippie owners, is set to take the fight to the European courts. Their pledge comes almost two years after Chancellor George Osborne ditched plans for 20% VAT on freshly baked pies and sausage rolls. Andrew Crook, secretary of the National Federation of Fish Friers (NFFF), said: “We have a protective claim going through KPMG, which is purely for takeaways. “They are trying to get VAT reduced to the lowest level. “The claim has been in court twice and has been refused so far, so it is going to be put to Europe.” The federation argues it should be exempt, in line with supermarkets, which do not pay VAT on some of the hot food they sell. At present, VAT makes up 99p of every £4.95 fish supper sold at Mr Crook’s two family-run chippies in Lancashire. He and other owners claim they could slash the cost of their food if they didn’t have to pay VAT. He said: “Every quarter it is a struggle. The Government claim that we are collecting it and adding it on to our prices. But the reality is that we are absorbing it because customers will only pay so much for their fish and chips. https://www.sundaypost.com/news/uk-news/tax-fight-for-battered-chip-shop-owners/ |
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Business RatesBusinesses getting screwed over with business rates (02Aug17)
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Business rates are charged on most non-domestic properties, like:
Your local council will send you a business rates bill in February or March each year. This is for the following tax year. Example Barbara has a business in England. The rateable value of her business is £10,000, so she uses the 2019 to 2020 small business multiplier (49.1p) to estimate her business rates as follows: £10,000 (rateable value) x £0.491p (multiplier) = £4,910 (basic business rates) https://www.gov.uk/introduction-to-business-rates |
Counter balance
How can a business benefit from the Government collecting tax or reduce the effects of tax?
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How the government spends your money | BBC Newsbeat
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How does Nando's avoid paying tax in the UK? | Guardian Animations
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Exchange Rates
What is an exchange rate?
Does anyone know what has recently happened to the pound?
Key method to help with analysis = SPICED
Does anyone know what has recently happened to the pound?
Key method to help with analysis = SPICED
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Activity: Exchange rates sheet
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UK: Pound drops to 31-year low against dollar on Brexit fears
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TRAILER: Dispatches: Supermarkets: Brexit & Your Shrinking Shop
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