Change in the Global Economy and Finance

Graham HaccheSeptember 11, 2014

Annual GDP Growth (%)—Some Major Economies, 1980-2020

Shares 1980s 1990s 2000-7 08-13 2014 * 2015 * 16-20 *

World 100 3.2 3.1 4.2 2.9 3.5 3.7 3.9

US 19 3.1 3.2 2.7 1.0 1.9 3.0 2.9

Euro A 13 … 2.3 2.2 -0.3 1.0 1.8 2.3

Japan 5 4.4 1.5 1.5 0.1 1.4 0.6 0.8

UK 3 2.7 2.8 3.2 -0.2 3.0 2.3 2.4

China 15 9.8 10.0 10.5 9.0 7.4 7.2 6.6

India 6 5.5 5.8 7.1 6.4 5.5 5.8 6.7

Sources: IMF WEO Database; National Institute Economic Review, August 2014.Percentage shares of world GDP are IMF estimates for 2013.* NIESR Forecasts

US: Average Interest Rates, Inflation, and Unemployment, 1980-2014

1980s 1990s 2000-07 2008-13 Aug 2014

6-mth $ LIBOR

10.6 5.5 3.7 1.0 0.3

Ann.Consumer inflation

5.5 3.0 2.8 2.0 1.5

Real interest rate

5.1 2.5 0.9 -1.0 -1.2

Unemp, % 7.3 5.8 5.0 8.2 6.2

Source: IMF WEO Database; personal estimates.

UK: Average Interest Rates, Inflation, and Unemployment, 1980-2014

1980s 1990s 2000-07 2008-13 Aug 2014

3-mth CD rate

11.8 7.9 4.9 1.6 0.6

Ann.Consumer inflation

7.0 3.3 1.9 3.2 1.6

Real interest rate

4.8 4.6 3.0 -1.6 -1.0

Unemp, % 10.4 8.2 5.2 7.5 6.4

Source: IMF Database; Bank of England; personal estimates.

Energy changes in the rental sector

ANDREW WARREN, DIRECTOR

ASSOCIATION FOR THE CONSERVATION OF ENERGY

Motivating the Private Rented Sector:

the UK Experience

18% of households privately renting (up from 10%)

60% of commercial properties privately rented

Landlords Energy Saving Allowance

Outlawing of any F or G rated rentals Timetable:

• Law created 2011• Negotiations on details 2012-4• Tenants can demand improvements 2016• Gas guzzling rentals outlawed 2018

New tax break for residential landlords operating from July

2014 to March 2017 (with hiccoughs)

Is it to encourage early movers? Or to incentivise larger

improvements than to the minimum E?

Changing Society:UK Population Trends in the Last 10

YearsProfessor Jane Falkingham

ESRC Centre for Population Change

University of Southampton, UK

ACES Conference 2014, 11th September 2014, London

Overview

1. Key trends in UK populationA growing population

An ageing population

An increasingly diverse population

Changing family structures

2. Trends in Living AloneWhat are the drivers of the increase in living alone?

Typologies of people living alone in mid-life

3. The Boomerang GenerationHow has the societal context changed?

Which young adults are more likely to be living with their parent(s)?

4. Implications of Demographic Change

17

1. Key trends in UK population

18

The drivers of population change

The size, composition and distribution of a population are determined by fertility, mortality and migration

Pt2 = Pt1 + B - D + I - EWhere:Pt2 Population at time t2

Pt1 Population at time t1

B BirthsD DeathsI In-migrationE Out-migration

Over the past two decades UK population has grown due to both natural increase and net migration

20

Future growth in UK population will come from both natural increase and net migration

21

An ageing population

22

UK Age, sex pyramid 2014 (line) & 2034 (shaded)

Source: ONS, 2012-based, population projection

The size of population aged 90+ will triple, 2014-2034

Post WW2 baby boomers in 2014

1960s baby boomers in 2014

The 1960s baby boomers will have retired by 2034

An increasingly diverse populationGrowth in ethnic minority group population, Eng & Wales

23

Source: Census data analysed by ESRC Centre on Dynamics of Ethnicity (CoDE)

Note : No Mixed category in 1991. No Arab category in 1991 and 2001.

Changing Family Structures

• Decline in marriage, increase in cohabitation

• Postponement of family formation, increased childlessness

• Partnership turnover and complex family structures

24

Decline in marriage, increase in cohabitation

25

Source: Beaujouan & Ni Bhrolchain (2011)

Postponement of childbearing / increased childlessness

26

Source: ONS (2013) Cohort Fertility, England and Wales, 2012

Percentage of women who remain childless, Eng & Wales

Increased partnership dissolution

27Source: ONS, 2011 Census

% households that are lone parent households

2. Trends in Living Alone

28

The chances of men living alone have declined at young ages but increased in mid-life

Source: Demey et al’s analysis of GHS/GLS 1985-2008

0

10

20

30

40

50

60

70

16-2425-3435-4445-5455-6465-74 75+

2000

2005

2008

Percentage men living in one person HH by age, Britain 2000-2008The Drivers of Living Alone

At younger ages: increased cost of renting / buying separate residence; benefit changes; greater experience of HE

In middle age: Increase in living alone, especially for men due to increased partnership dissolution, plus significant minority men who never partner

Partnership trajectories into living alone

30

Males Females Males Females Males Females35-44 45-54 55-64

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Never partnered Ever cohabited but never marriedEver married

Source: Demey et al., 2013 analyses of UKHLS, 2009/10

Distribution of those currently living alone, according to age and partnership history. UK men and women aged 35-64.

The socio-economic characteristics of those living alone differ by age & partnership history

31

Never Ever Never Ever Never Ever35-44 45-54 55-64

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Higher education Some qualifications No qualifications

Educational distribution of UK men aged 35-64 living alone, according to age and whether ever had a co-residential partner.

Source: Demey et al., 2013 analyses of UKHLS, 2009/10

3. The “Boomerang Generation”

32

Changing context of young adults’ household formation

• Increased enrolment in Higher Education, especially among females

• Youth unemployment and economic precariousness for those in work

• Decreasing availability and affordability of housing• Welfare retrenchment• Increased international migration

(See Stone, Berrington and Falkingham (2014) for a detailed discussion)

33

Increase in co-residence of UK young adults living with their parent(s)

Males Females

Source: Authors’ analysis of LFS, Oct-Dec quarter, 2008 and 2012

34

Percentage living with parent(s), 1998, 2008 and 2012

One in four unemployed men in their late twenties or early thirties is living with parent(s)

35

Percentage of men aged 25-34 living at home according to occupational class, UK. 2009-2010

Source: Berrington and Tammes’ weighted analysis of UKHLS wave 1 2009-10

Factors associated with leaving home 2009 – 2011 UKHLS

• Important factors include:– Gender– Age– Household

income– Living outside

London– Parental family

structure

36

Two natu

ral/a

doptive p

arents

One p

arent

only

Step p

arent f

amily

Two natu

ral/a

doptive p

arents

One p

arent

only

Step p

arent f

amily

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16 Highest quartile equiv. HH income

Lowest quartile equiv. HH income

Parental Family Structure

Source: Tammes, Roberts and Berrington’s analysis of UKHLS w1 and w2

Annual probability of leaving home in London, Men aged 18-21.

Factors associated with returning home

• Stone, Berrington and Falkingham (2014) Longitudinal analyses following up young adults

• Turning points in the life course associated with “boomeranging” to parental home – Experiencing a partnership dissolution,

• Especially for men

– Finishing full time studies• Both men and women

37

Summary of household formation trends in young adulthood• Decreasing headship rates due to postponement of

leaving / more returning to the parental home and the postponement of partnership formation

• As young adults increasingly leave home for reasons other than family formation they are more likely to return home

• As a result of increased HE enrolment young women have become more like young men in their leaving and returning home behaviour

• At older ages (e.g. early 30s) remaining living with parents associated with economic precariousness

38

4. Implications of Demographic Change

39

Implications of Demographic Change (1)

• Growth, diversity population– New, expanding opportunities

• Ageing of the baby boomers– But, increased economic dependency young adults– Obligations for caring– Future elderly will have less kin availability

40

Implications of Demographic Change (2)

• Young adults boomeranging, renting– Choice or constraint?– Implications for spending

• Heterogeneity in groups living alone– A higher proportion of high flyers, especially at young

ages– Disadvantaged (men especially) face less positive

future as reach old age

41

Acknowledgements

This research is funded by ESRC Grant numbers RES-625-28-0001 and ES/K003453/1. The Centre for Population Change is a joint initiative between the University of Southampton and a consortium of Scottish Universities in partnership with ONS and NRS. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and should not be attributed in any manner to ONS or NRS.

The General Household Survey/General Lifestyle Survey and the Labour Force Survey are carried out by the Office for National Statistics. Analyses of Understanding Society were made with the assistance of Ann Berrington, Juliet Stone, Peter Tammes and Deiter Demey. Understanding Society is carried out by the Institute for Social and Economic Research at the University of Essex. Access to all data is provided by the UK Data Archive. The original data creators, depositors or copyright holders, the funders of the Data Collections (if different) and the UK Data Archive bear no responsibility for their further analysis or interpretation.

42