Discuss how the strategic behaviour of BPL would be affected by changes in GDP
Gross Domestic Product (GDP) is a measure of the country’s national income and it is calculated by aggregating the income of the total population resident in the UK over a period of time. Fig.2 provides data on the percentage rise or fall of GDP for each quarter of the year from 2006 to 2010.
During the first two years of the time series there is positive growth, which means that the UK economy was expanding and the total income of UK residents was rising. However from the second quarter of 2008 (ie April to June 2008) there is a period of negative growth, indicating a downturn in the economy. This means that the aggregate total of income of UK residents was falling, leading to a downturn in spending by UK residents.. As this quarter was followed by negative growth in the following quarter (2008 Q3), it can be said that the UK was officially in a recession, ie two or more quarters of negative growth of GDP.
The UK recession lasted for six quarters (18 months) and was particularly severe in the winter of 2009. If the percentage fall in GDP between 2008 Q2 and 2009 Q3 is added up, it can be seen that the economy contracted by 6.1%. In the spring and summer of 2009 the UK economy remained in recession, although it declined at a slower rate. In 2009 Q2 GDP declined by 0.6% decline compared with 2.5% decline in the previous quarter.
Although the recovery started at the end of 2009, GDP only increased by 0.1% during this quarter, and 0.3% in the next quarter. The summer of 2010 saw more substantial growth only for the economy to slip back to slower growth in 2010 Q4. This last figure is an estimate, or more likely a forecast. In reality, performance in Q4 was especially disappointing and was made worse by the bad weather before Christmas, as well as the threatened cuts in government spending.
The fall in GDP is significant for BPL because BPL offers a luxury service. The...
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