PESTLE - Economic
The first E in PESTLE stands for economic influences.
Economic influences such as inflation rateThe rise in the price of goods and services., interest rate The price at which you can borrow money, or the return on how much money you can save. and unemployment rateThe percentage of the total labour force that is unemployed. can affect an economy’s performance and this can directly impact on an individual or organisation.
- The impact of an inflation rise on an individual is that as inflation rises, every pound you own buys a smaller percentage of a product or service. This means you get less for your money.
- The impact of an increase in interest rates on a business is that if interest rates rise, people may save more money in the bank, and so spend less on goods and services.
Question
If the unemployment rates increase, what is the likely impact on individuals and businesses?
Individuals will have less money to spend on goods and services. This may result in a fall in sales for businesses that sell luxury items such as holidays. But it could result in an increase in sales for businesses that operate in the budget sector such as low price supermarkets and clothes retailers.
