Analyse the effects of a rise in the UKs economic output

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Analyse the effects of a rise in the UK’s economic output

UK economic output rose by 0.8% between July and September. Economic output is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. Businesses will benefit from this as rising GDP may indicate rising incomes and increased spending on goods and services. This will generate more profit for firms and increased opportunities for future investment. This is particularly true in the housing market where construction companies are in high demand and the increase in supply of houses is boosting output and investment in this sector and beyond.

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        Rising GDP will also benefit the government. Increased spending will boost demand for labour by firms, which will reduce the requirement to spend so much on benefits by the government as well as increasing income tax revenues. Extra government revenue helps to reduce the budget deficit and consequently lead to more sustainable government finances. Higher output raises tax revenue without having to increase tax rates, and some of this extra revenue can also be used to improve public services, such as education and health care.

Although incomes are rising, if the cost of living is rising at a faster rate ...

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