US Volatility Shocks Impact UK Economy: GDP Growth Decline, Inflation Rise
The study shows that when the US economy experiences more unpredictable changes, it affects the UK economy too. A rise in US economic uncertainty leads to a slight drop in UK economic growth and a small increase in UK prices. The researchers used a model to simulate different types of uncertainty shocks and found that certain types, like changes in foreign wages and productivity, have a bigger impact on the UK economy compared to others.