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The report further notes that strong economic growth has continued to boost the resilience of global financial markets, as well as UK’s financial market. Additionally, concerns related to tail risks have reduced within the global financial markets (Financial Policy Committee 7). Some of the key challenges for the UK economy include economic recovery from the financial crisis of 2007-2008, improving long-term growth potential, and minimizing inequality (OECD 1). Economic performance in the UK was strong between 1997 and 2007, with GDP per capita expanding at a faster rate than any other G6 country.

The post-recession period had a significant negative impact on all OECD countries with the UK performing worse than average. However, over the period between 1997 and 2011, productivity growth in the UK was second to the US and gross domestic product (GDP) per worker was similar to other OECD countries. On the other hand, productivity levels (GDP) per hour is still below the US, France, and Germany, while the rate of employment is similar to the US and greater than continental Europe (Pessoa & Van Reenen 1).

According to Rhodes 3), UK’s economy grew for the first three quarters of 2013. Gross domestic product (GDP) grew by 0.8% in the third quarter of 2013, compared with the second quarter of 2013. GDP is currently 2.0% below its peak in the first quarter of 2008. This has been the most prolonged period of GDP growth since the first three quarters of 2011 (Rhodes 3). The annual rate of inflation (CPI) as at November 2013 stood at 2.1%, a decrease from 2.2% the previous month. Rhodes (3) has noted that the Bank of England’s target is to get the inflation rate (CPI) as low as 2%.

The rate of employment stood at 72.0% as at October 2013, while the unemployment rate was 7.4%, which was a decrease of approximately 99,000 people (Rhodes 3). In a series of meetings since October 2008 to March 2009, the Bank of