Economic Recovery An economy often faces a business cycle that is characterized by four parts. A recovery is experienced in an economy after a recession. During a recovery, an economy regains and exceeds the economic performance before the recession (Mankiw 2012, p. 245). Besides, some economies experience high levels of growth in various indicators such as GDP and employment. The rate of recovery depends on how fast the aggregate demand will grow after the recession. To spark off growth after the recession, the UK implemented stimulus macroeconomic policies between 2009 and 2010. The policies were aimed at ensuring that the aggregate demand and boosting confidence. For instance, the interest rate was reduced by 0.5% in 2008. Secondly, the government increased borrowing. This measure led to an increase in the budget deficit to more than £140 billion in 2009. This deficit is expected to persist in the future. Thirdly, the Bank of England also increased the money supply in the banking system through a policy known as quantitative easing. This was aimed at increasing the number of loans issued to consumers. Further, the value-added tax was reduced from 17.5% to 15%. However, this was later increased to 20% in 2011. Other measures that were used to stimulate demand are consumer subsidy and the car scrappage scheme among others. These measures and others led to the recovery of the UK after the recession (Mankiw 2016, p. 191). The recovery stage in a business cycle is displayed in the diagram below. (Source of the chart – Mankiw 2016, p. 206) Analysis of Imports How a fall in the Value of British Pound Affects Imports If the British Pound weakens, then the imports will be more expensive in the UK. This makes the imports to be less competitive as compared to the goods manufactured in the UK. This will lead to a reduction in the volume of imports. However, the change in the volume of imports highly depends on the price elasticity of the goods. How a Reduction in the UK Labour Affects Productivity Generally, labor productivity is measured by evaluating output per worker over a certain period. It is often used as an indicator of the productive potential of an economy. A country with weak labor productivity is likely to experience a low growth rate, high inflation, and low export. Since the beginning of the recession, the UK economy has experienced low labor productivity. It is estimated that it declined by 15% after the recession. A decline in the productivity of labor increases the cost of production. This causes prices to go up. Thus, the imports will be cheaper and competitive in the UK market. This will eventually cause an increase in the quantity and amount spent on imports. Benefits of a Weak British Pound There are several ways through which the UK economy can benefit from the weak Pound. The first benefit is that it will improve the current account deficit. A fall in the value of the Pound makes exports more attractive as compared to the imports. The country has experienced a persistent deficit in the current account that worsened after the recession. For instance, the deficit amounted to 7.2% of GDP in 2013. With a weaker pound, exports will be cheaper and competitive in the international markets while imports will be expensive in the UK market. Therefore, it will discourage imports and stimulate expor