United Kingdom is one of the best economies in the world
It is the third-largest in Europe measured by nominal Gross Domestic Product(GDP) and sixth in the world. The British economy is made out of England, Scotland, Wales and Northern Ireland.
For an economy the national output and national income are very important and we can calculate both of these by GDP, which refers to the market value of all finished goods and services produced within a country in a given period of time. We can calculate the GDP in three different ways defining the same total. They are the output, the income and the expenditure(GDP=C+I+G+(X-IM) approach.(add taxes and subtract subsidies to the first two methods though).
There is an economic growth as we can see (see graph 1) from the GDP of the country through the past years. In March of 1973 there is the highest increase in the rate of economic growth as it reaches 5.3% and one year later, March of 1974, we can see a decrease of economic growth of a rate of 2.5%. There is also an enormous continuous increase of total GDP after 2002 till 2008, as we can see from the graph 2. After 2008 there is a decrease in GDP till 2010 due to world economic crisis however, there is an increase in 2011 and it reaches $2253 trillions.
Graph 1

Graph 2

Potential GDP and the GDP gap
Potential GDP is the amount of national output that would be produced if the economy was operating at its full employment level, where the actual GDP is the level of total output of the economy. The difference between actual and potential GDP(Y-Y*) is the GDP gap. In the case that actual GDP is above potential we have a gap call inflationary gap and when actual is below potential GDP we have a recessionary gap. As we can see from graph 3 UK is mostly operating below its maximum potential so there is a recessionary gap.
Graph 3

INFLATION
Inflation is the increase in