TEST 2 READING 1 With the UK economy stuck in a groove, what prospects for 2013?

On the Saturday before Christmas the shop windows told their own story. Up to 50% off at Hobbs. Discounts of 60% at LK Bennett. Similar reductions at French Connection and the Gap. The sales started early this year and that means the economy is struggling. Fearful of being left with large amounts of unsold stock, retailers are slashing prices to attract hard-up consumers. It was the same a year ago. Hopes of recovery have been dashed in 2012, a year in which the UK has gone nowhere fast. Interest rates, gross domestic product and house prices are where they were in January. The economy is not collapsing but it is not growing either. For the past two years it has gone sideways, and the expectation at the Bank of England and the Treasury is that 2013 will be little better. Historically, it is extremely unusual for the economy to be stuck in a groove like the needle on a vinyl record. Subsistence economies can have long periods of low or zero growth but modern western economies traditionally do not. There is a cyclical pattern in which periods of slow growth gain momentum, ending in a boom-bust phase. A recession, normally relatively brief, removes the excess and allows the cycle to begin again. For the past century, this process has been lubricated by government action: interest rates are raised to stifle mounting inflationary pressure in the boom then cut in order to get growth and employment rising again during the downturn. Tax and spending policy has tended to operate in the same counter-cyclical fashion. The crisis of the past five years can be divided into two distinct phases. What happened in the first phase was entirely predictable: the financial collapse of 2008 and the economic slump of 2009 followed from the asset price bubbles of the mid-2000s. It was a big collapse because there was a big bubble. Less easy to explain is the crab-like performance subsequently. The UK economy has not really budged since the autumn of 2010, something that has not happened since the second world war and probably for a long time before that. Other western economies have broadly followed the same pattern. The US has grown a bit faster than the UK and the eurozone is already in a mild double-dip recession. In some ways, not a lot has changed since before the crisis. Real income growth is still weak, but is no longer being supplemented by large dollops of borrowing. Banks are still recognisably the same creatures they were in 2007 but are sitting on vast quantities of underperforming assets. Expectations are already so low there is a chance that 2013 will surprise on the upside. Recent US data has looked relatively perky. Rising housing starts indicate that the long realestate recession is over. Investment is picking up and jobs are being created. Similarly, the worst for the eurozone may now be over. To be sure, the economic numbers are still dire and austerity is still hurting, but the financial markets were impressed by Mario Draghi's insistence that the European Central Bank would do whatever it took to safeguard the future of the single currency.
guardian.co.uk, 23 December 2012

I.

Mark the statements true (T) or false (F).

1 2 3 4 5

The UK economy has grown in the past two years. Early sales in shops are indicators of the struggling economy. Modern western economies can experience long periods of low or zero growth. Most of the western economies has shown significant growth since 2010 Recent US data forecasts positive changes for 2013.

___ out of 5 II. Answer the following questions briefly.

1. What was the UK economy like in the years of 2010-2012? 2. Shortly describe the cyclical pattern western economies usually experience. 3. What happened in the first phase of the credit crisis? 4. What does UK have common with the eurozone economies? 5. List some positive indicators for the year of 2013. ___ out of 10 III. Choose the correct alternative. a) decreasing prices b) stabilising prices c) increasing prices 2. hard-up consumer a) consumers able to spend a lot of money b) consumers who cannot afford spending a lot of money c) impolite consumers 3. crab-like performance a) slow performance b) rapid performance c) extraordinary performance 4. double-dip recession a) short recovery followed by another recession

1. slashing prices

b) long term recession without signs of recovery c) worldwide recession 5. subsistence economies a) export led economy b) struggling economy c) economic system reliant on the self provisioning of the community ___ out of 5

READING 2 Workers face 'hard year of slog' in 2013

Workers can expect longer hours, a continued squeeze on pay and fewer jobs being created in a "hard year of slog" in 2013, a report has warned. Job insecurity will remain high, with workers maintaining a "grin and bear it" attitude, said John Philpott, director of The Jobs Economist. Unemployment is forecast to increase by 120,000 to 2.63 million in 2013 because growth in the workforce will exceed the number of jobs being created, Philpott said. Youth unemployment is forecast to fall below 900,000, while long-term unemployment will remain broadly the same, the report said. Pay deals will continue to be affected by unemployment, with pay increases lagging behind inflation, leading to wage cuts for workers. Philpott said he expected only limited support from workers in private firms for union opposition to public sector cuts. "Our jobs outlook for 2013 is relatively optimistic in that we expect only a modest rise in unemployment. However, the fact that this can be considered good news merely underlines the harsh reality of current economic austerity. "GDP may grow somewhat faster but 2013 will be another year of hard slog, with longer hours for those lucky enough to have jobs and a further squeeze on living standards for workers and the jobless alike. "Hard-pressed private sector workers are likely to keep their heads down and get on with the job rather than actively stand shoulder to shoulder with striking public sector trade unionists. "Workplace disgruntlement in the private sector will instead take the form of simmering distrust of bosses, especially those who adopt the trendy management speak mantra of 'employee engagement' while piling the pressure on overstretched staff," he said. The number of people in work could reach 30 million before the next general election, a separate report from the Chartered Institute of Personnel and Development has predicted. The study of the labour market said continued growth in employment was likely in 2013. But the report also warned that excess capacity had built up in some firms as employers held on to skilled and talented staff. This could lead to weaker employment growth even if the economy picks up.
guardian.co.uk, 28 December 2012

I. Which of the statements below are true (T) and which are false (F)

1 2 3 4 5 6 7

Youth unemployment is forecasted to increase in 2013. Pay increase is promised to follow the inflation. The long term unemployment rate will not change in 2013. Despite of GDP growth the year of 2013 will be difficult. Positive economic indicators will increase the employment rate. There will be more workers than jobs created in 2013. Some firms have built up extra capacity of workers.

___ out of 7 II. a. b. c. d. e. Find the opposites of the following expressions in the text. decrease job security employment fluctuate salary increase

___ out of 5 III. Finish the following sentences with your own words.

1. Workers face .................................................................................................................. in 2013. 2. Pay deals in 2013.............................................................................................................. 3. Private sector workers...................................................................................................... 4. Youth unemployment....................................................................................................... ___ out of 8