Economic growth

Economic growth is important if businesses are to grow and prosper. It relates to growth in the size and quality of the economy as a whole. Growth is measured as the change in the 'gross domestic product' GDP of a country over a year, after subtracting an amount due to the level of inflation to produce a figure for real growth. The comparative economic growth of a country when compared with rivals is an important indicator of rising opportunities for domestic business.

The GDP of the UK will grow faster when employers are taking on more labour, and when factors of production are becoming more productive (e.g. through the adoption of superior production technologies).

When businesses take on more labour, and GDP rises, then consumers will have more spending money in their pockets and this will lead to ongoing increases in demand.

In contrast, periods of slow or falling economic growth are bad for the health of business.

- Real GDP growth 2003/ 2004 change over previous year

The following table shows OECD forecasts for real GDP growth in a number of European countries in 2003 and 2004. The faster the projected rate of growth the better the opportunity for business as a whole:

Country_____________________________Real GDP Growth
________________________________2003___________2004

France_______________________ __ 1.2______________1.6
Germany____________________ ____0.3______________1.7
Italy_________________________ ___1.0______________2.0
UK____________________________ _2.1______________2.6