Analysis three macroeconomic factors in the UK and how do they affect Essay

Analysis three macroeconomic factors in the UK and how do they affect the profitability of Sainsbury company - Essay Example It can be stated that the GDP growth will positively impact towards improving the profitability of Sainsbury’s. GDP also positively impacts upon public spending which is a crucial aspect for a retail organisation such as Sainsbury’s as it can enable them to garner more profit. Though, slower growth of GDP can create unemployment, which can in turn affect Sainsbury’s profitability as new recruitment can be stopped by the organisation along with investing in any new purchases until the economy gets better (Economy Watch, 2009). Interest Rate and Inflation Rate UK interest rate in March’ 2011 had been registered at 0.5% which is a record low (BBC, 2011). In February 2011, inflation rate of UK rose to 4.4% (BBC, 2011). Interest rate has a major impact on time value of money. Changes in case of inflation rate generally result in alterations in the interest rate. These two factors are the key decision making factors for making any investment decision since these factors have a straight impact upon the ‘investment yield’. In case of the UK, the record low interest rate will support the investment on shares. Rising interest rates slows down the inflation.