Some economists believe that rapidly rising health care spending will then be lowering the GDP and overall employment, while raising the inflation. Tesco is affected by inflation in many ways. Inflation means that the costs for Tesco will increase. For example, they will have higher energy bills, higher transport costs, higher costs for raw materials and higher cost of services such as internet services and insurance. Due to these increases in costs, Tesco must react to them by either passing on these costs to consumers in the form of higher prices for products and services which may lead to a decrease in demand, or by absorbing the increase in costs and not passing them on to the consumer. This means that profits for Tesco will fall so they must find other ways of trying to reduce costs. As costs are rising, Tesco must react by reducing their costs of production or the price they pay for goods and services to suppliers to be able to compete with competitors such as ASDA and Sainsbury’s and survive.In the UK, around 40% of the unemployed are under 25. Tesco’s first response to a period of recession is to stop recruiting new staff rather than to lay off their existing, experienced and knowledge workforce. Only when Tesco is in a state of financial stress does it normally make people redundant. The young trying to move from education into the workforce are then most exposed to the disappearance of new vacancies. The government’s strategy to tackle the high levels of youth unemployment has been coherent but may be poorly delivered and lacking in scale. Noting that most youth unemployment occurs between leaving full-time education and finding work, the government has not only got to extend education and training participation as part of its economic policy, but also try to increase recruitment of the young into jobs through offering some work experience or apprenticeships if they are not making successful transitions quickly. This has implications for Tesco as they may have to take on less skilled individuals who the government have put into working schemes alongside Tesco. Tesco’s productivity may decrease as a result of poorly skilled staff and they may react by cutting out apprenticeship schemes within the company and put all prospective-workers through the application process like everyone else.