Read the FT article by Delphine Strauss published on 28th November 2022 and entitled Rise in long-term sickness poses threat to UK economic growth

Article: https://www.ft.com/content/8eb63de7-6b08-4714-9435-d3c42d2e4ba2

Briefly summarise the articles main points and use the IS/LM and AD/AS models to predict the short and long- run implications for the UK economy from the evidence and analysis presented in the article.

In particular, in your analysis you can consider addressing, among others, a number of issues such as:

• Why is the labour supply shrinking? Is a shrinking workforce a problem? Is labour supply likely to eventually increase in the future?
• Should the government intervene in some way to influence what is happening in the labour market?
• Why would growth and inflation be affected by the decrease in labour supply?
• What can the IS/LM and AD/AS models predict about the short and long run impact on output, inflation, employment?

In the analysis, show an awareness of how the issues and theories can help us understand current events. You do not have to answer each individual question but, rather, write a short piece that summarises the article by considering the questions above as a broad guideline to structure your analysis.

(15 marks)