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How have world shocks affected the UK economy?

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  • Chowla, Shiv

    (Bank of England)

  • Quaglietti, Lucia

    (Bank of England)

  • Rachel, Lukasz

    (Bank of England)

Abstract

The UK economy is closely integrated into the wider global economy. These ties mean that global developments affect the economic fortunes of the United Kingdom. This article presents model-based estimates which suggest that world shocks have driven around two thirds of the weakness in UK output since 2007. Trade linkages are an important channel for the transmission of world shocks to the UK economy. But financial linkages and spillovers through uncertainty are significant, too — and together are likely to account for the majority of the impact of world shocks on the United Kingdom since 2007.

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  • Chowla, Shiv & Quaglietti, Lucia & Rachel, Lukasz, 2014. "How have world shocks affected the UK economy?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(2), pages 167-179.
    • Handle: RePEc:boe:qbullt:0141
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    3. Gkanoutas-Leventis, Angelos & Nesvetailova, Anastasia, 2015. "Financialisation, oil and the Great Recession," Energy Policy, Elsevier, vol. 86(C), pages 891-902.
    4. Knarik Ayvazyan & Ms. Teresa Daban Sanchez, 2015. "Spillovers from Global and Regional Shocks to Armenia," IMF Working Papers 2015/241, International Monetary Fund.
    5. Cesa-Bianchi, Ambrogio & Stratford, Kate, 2016. "How could a shock to growth in China affect growth in the United Kingdom?," Bank of England Quarterly Bulletin, Bank of England, vol. 56(1), pages 4-11.
    6. Sedegah Kordzo & Odhiambo Nicholas M., 2021. "A Review of the Impact of External Shocks on Monetary Policy Effectiveness in Non-WAEMU Countries," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 31(3), pages 37-59, September.

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