Growth, prices & living standards

Say it: eco-NOM-ic GROWTH
Capitals show stress; this is a reading guide, not phonetic spelling.

Economists commonly measure growth using real GDP: the value of production adjusted for price changes. More money spent because everything costs more is different from producing more. Growth tells us about the size of economic activity; it does not tell us how fairly its benefits are shared.

Use it naturally
stimulate growth · sustain growth · strong growth

Say it: eco-NOM-ic DOWN-turn
Capitals show stress; this is a reading guide, not phonetic spelling.

Businesses may receive fewer orders, cut investment or hire fewer workers. A downturn is a broad term for weakening conditions. A recession is a more specific, significant decline in activity; the criteria used to identify one vary. Avoid calling every disappointing month a recession.

Use it naturally
face a downturn · a sharp downturn · recover from a downturn

Say it: LIV-ing STAND-ards
Capitals show stress; this is a reading guide, not phonetic spelling.

Consider income, housing, essential goods and access to services. A growing economy may help, but the gains may not reach everyone. Living standards concern material conditions; quality of life is broader and can also include relationships, safety, free time and satisfaction.

Use it naturally
raise living standards · falling living standards

Say it: in-FLA-tion
Capitals show stress; this is a reading guide, not phonetic spelling.

Inflation measures the change in prices across a basket of goods and services, rather than one isolated price. If inflation falls from 8% to 3%, average prices are still rising, just more slowly. Falling inflation is called disinflation; a falling general price level is deflation.

Use it naturally
rising inflation · curb inflation · inflation eases

Say it: REAL WAGES
Capitals show stress; this is a reading guide, not phonetic spelling.

Nominal wages are the amount of money you receive. Real wages describe its purchasing power. If pay rises by 4% and prices by 8%, real pay falls by about 3.7%: 1.04 divided by 1.08, minus 1. The simple difference, 4 minus 8, is a useful approximation but not the exact result.

Use it naturally
falling real wages · real wage growth · keep pace with inflation

Say it: PUR-chas-ing POW-er
Capitals show stress; this is a reading guide, not phonetic spelling.

Purchasing power applies to wages, savings or any amount of money. If £100 used to cover ten identical items but now covers eight, its purchasing power has fallen. Different households face different spending patterns, so an average inflation rate may not reflect every family’s experience.

Use it naturally
erode purchasing power · maintain purchasing power

Say it: dis-PO-sa-ble IN-come
Capitals show stress; this is a reading guide, not phonetic spelling.

Disposable income is available for spending or saving. It is not simply the money left after rent, food and other essentials. In a simplified budget, £2,500 of income minus £500 of direct taxes leaves £2,000 of disposable income. Essential bills must still be paid from that amount.

Use it naturally
household disposable income · disposable income falls

Say it: IN-ter-est RATES
Capitals show stress; this is a reading guide, not phonetic spelling.

An annual interest rate of 5% means £50 interest on £1,000 over one year in a simple example with an unchanged balance. Actual loan payments also depend on fees, repayment schedules and whether the rate is fixed or variable. Existing fixed-rate borrowers may not feel a rate change immediately.

Use it naturally
raise interest rates · cut rates · a fixed interest rate

Say it: BOR-row-ing COSTS
Capitals show stress; this is a reading guide, not phonetic spelling.

Borrowing costs include interest and relevant fees. A low advertised interest rate does not always mean the cheapest loan overall. For a household, higher borrowing costs can squeeze its budget. For a business, they can make a planned investment less attractive.

Use it naturally
higher borrowing costs · reduce borrowing costs

Say it: PUB-lic DEBT
Capitals show stress; this is a reading guide, not phonetic spelling.

Public debt is a stock: the amount outstanding at a point in time. A government can owe money to domestic or overseas lenders. Debt may finance valuable investment or current spending. Its size alone does not tell us whether the borrowing has been useful or sustainable.

Use it naturally
service public debt · public debt rises

Say it: BUD-get DEF-i-cit
Capitals show stress; this is a reading guide, not phonetic spelling.

A deficit is a flow measured over a period, such as one year. Public debt is the outstanding stock of borrowing. In a simplified example, £120 billion of government spending and £100 billion of revenue produce a £20 billion deficit. A smaller deficit can still add to debt.

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run a deficit · reduce the deficit · finance a deficit

Say it: in-e-QUAL-i-ty
Capitals show stress; this is a reading guide, not phonetic spelling.

Income is a flow, such as earnings in a year. Wealth is a stock of assets minus debts. Two people with similar salaries may have very different wealth if one owns a home outright and the other has large debts. Be precise about whether you mean income, wealth or opportunity.

Use it naturally
widen inequality · reduce income inequality · the wealth gap