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Both fiscal and monetary policy have time lags associated with their use. For monetary policy the issue is with the transmission mechanism - it takes a long time for a change in the base rate to filter through. Fiscal policy also has time constraints imposed on it - certain tax policies are only introduced in yearly budgets, and the multiplier effect also takes time to have an impact. It is therefore contentious as to whether macroeconomic policies are at all suitable for fine-tuning demand when it comes to controlling the economic cycle. This was illustrated by the 2008 recession, where pre-recession contractionary monetary policy continued to stifle aggregate demand as the recession took hold due to the unintended consequences of time lag.

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The rate at which companies raise prices partly depends on their inflation expectations; if businesses expect higher price rises by their competitors, as a result of higher inflation, they may be more inclined to make larger price increases themselves. The MPC believe that medium-term inflation expectations remain "sufficiently well anchored". This, paired with announcements of increased labour productivity in Q4 of 2013, could provide an argument to keep interest rates low. It should be noted, however, that labour productivity still reportedly remains below pre-recession level.

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Forward guidance is an important tool in controlling inflation expectations, however, when dealing with business/consumer confidence and animal spirits, it is important that the guidance given is clear and understandable. It is arguable that the current guidance issued by the MPC is too vague and unclear, as opposed to the more "definite" figure of 7% unemployment given previously - this potentially limits its impact.

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In Q4 of 2013 the UK saw a 0.3% rise in labour productivity. This growth in labour productivity will mean that wages, and subsequently aggregate demand, can rise without the usually associated cost push inflation (and possible wage spiral). Both increased productivity and lower cost-push inflationary pressures contribute to an increased international competitiveness from UK businesses. The recent growth in real wages could also in part be attributed to the rise in labour productivity.

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China's dependency on imported raw materials has benefited developing countries like Africa and has meant that China has become the engine to economic growth and although China's growth is slowing down it is unlikely that countries like Africa will be effected as China will still need the essential raw material, which it is unable to produce, in order to reboost it's growth

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China's economic slowdown has not created extensive fear and panic in African countries as yet, because trade and investment ties between the two nations is considerably strong and the lack of competition in certain African markets means that China has an advantage, as it already invests heavily into Africa. However, African countries need to be more cautious and not rely so much on their commodities market. As we know, demand patterns constantly change and the agricultural sector is subject to volatility.

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As a long-term goal, the Chinese government has been trying to reduce the economy's dependence on exports and enhance the role of domestic consumption, but it is unclear how much growth it might be willing to sacrifice to reach that goal.

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The slowdown in China is investment-led as exports are still quite strong. However, these exports are more dependent on the services sector now rather than manufacturing as manufacturing is a heavily invested sector.

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What must African countries do in the longer term? African countries must diversify their products and their markets – instead of exporting cheap raw materials that do not create many jobs; they must refine the raw materials. Adding value to raw materials creates jobs and earns more money. Also they must diversify their markets and actively explore other emerging markets. For example the US and European and many other industrial economies now show signs of improving.

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A severe downturn in China means that emerging market exporters – especially African ones, to China will see demands for their commodities drop. It will also knock prices for raw materials – Africa’s biggest exports. For now, in spite of China’s slowing growth, its demand for African metals and minerals are still high.

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In the UK, there is a strong connection between growth and trade deficit. Soon after the economy went into recession in 1990's and 2008, the trade deficit began to fall quickly. However, as the economy came out of recession into the period of strong growth in 1993, the trade deficit began to rise quickly, and continued to rise through the next 15 years.

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Uk households save around 5% of

their income, Chinese households save

around 33%.

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The UK economy is in recovery mode and grew by 1.8% during 2013, its fastest rate in six years. However, this is largely driven by debt-fuelled consumer spending and a revival of activity in the housing market. Business investment is sluggish and UK trade still runs a significant deficit. Hence rebalancing the economy by encouraging business investment, manufacturing and exports, should be the central priority of Chancellor George Osborne's budget in 2014.

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Although China is going through a slow down it is important to put this into context as their growth is still over 7% and this will have a direct impact on other countries (Australia, Zambia), however the implications will not necessarily be huge. Their slowdown will also have a knock on effect on the UK but not necessarily on a huge scale as they are not a main export country like the EU (over 50%).

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Japanese auto giant Toyota, is to end its vehicle and engine production in Australia by the end of 2017 due to strong Australian Dollar and extremely competitive market. Think about the job losses.

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With the exception of 1997, in every year since 1987 the UK has recorded a trade deficit in good and services. This deficit reached its peak at £45.9 billion in 2006.

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After leaving the European Exchange Rate Mechanism (ERM) in 1992, Sterling fell rapidly against the Euro-area currencies, reaching a low in 1996.

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It is unwise to say a current account surplus is always good and a current account

deficit is always bad as a country can only run a surplus at the expense of another

running a deficit.

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Most of Britain’s exports go to other EU countries, but many EU economies are also suffering

from a collapse in aggregate demand as a result of their similar loss of international competitiveness.

The UK should aim to shift their exports and particularly their services, where they hold a comparative

advantage, to emerging economies such as BRIC where there is continually growing demand for goods

and services. However this will be difficult and the UK will need to implement supply-side reforms

and investment with the view to achieve gains in the long term as oppose to seek short term returns;

an idea which has been proven successful under Mittelstand.

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China's economic growth is growing at a slower rate

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China's growth is slowing down which is good for it's inflation

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China need to rebalance their economy by consuming more

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Need to rebalance the economy. In the UK, we need to focus more on exports and investment. In china more consumption is needed

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Need to rebalance the economy. In the UK, we need to focus more on exports and investment. In china more consumption is needed

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Ahmed

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WTO runs in the interest of manufacturing/farmers in developed worlds.

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China's level of investment led growth is unsustainable

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Mittlestand are small/medium businesses in germany

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Firms protected from competition have little incentive to improve efficiency

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Is trade with China so important, the EU is our main trading partner

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The UK is currently the fastest growing economy in the EU

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China's growth is heavily investment lead and may lead to a credit bubble

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A slowdown in one country affects another country. For example slowdown in China has affected Zambia's economy for copper

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Uk will become import dependant: deteriorate balance of payments

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China's debt is twice their GDP - this is dangerous

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An increase in AD may not lead to an increase in the price level

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An increase in AD may not lead to an increase in the price level

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Inverted 'L' shaped LRAS - Keynes.

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Chinese Slowdown will impact more on some countries such as Australia

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Chinese Slowdown will impact more on some countries such as Australia

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'Reshoring' - bringing manafacturing jobs back to UK due to higher labour costs in emerging countries e.g - china/india