...IBUS 750-Exploring Global Business May 31, 2014 Economic and Social Challenges in the United Kingdom and Their Impact on Business. The Great Recession was a crisis that affected economies worldwide. During this time, some countries only experienced small declines in Gross Domestic Product (GDP) and declines in international trade while others experienced more severe repercussions such as increased unemployment rates, economic decline, increased poverty populations, higher crime rates, and other calamities. These challenges have caused the demise of businesses, mass employment layoffs, and a decreased ability to take financial risks across the world. Many countries and businesses are continuously struggling to rebuild their wealth and prevent major financial losses from occurring in the future. As a result of this crisis, the United Kingdom faced economic disparities due to a persistently high unemployment rate, stagnant economic growth, and excessive government borrowing. These factors have resulted in social and economic challenges that affect various businesses attributes including reduction in wages, availability of mortgages, talent constraints, global talent acquisition efforts, the need for innovation, global expansion, and an increase in self-employed individuals. The Great Recession had a major impact on the United Kingdom. One of the most detrimental affects of this crisis was the rise in unemployed citizens across the nation. Due to...
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...against the Euro in recent years b) Evaluate the likely economic effects of a significant fall in the value of sterling against the Euro. 2)a) Examine the effect of the Common Agricultural Policy on the world trade in agricultural goods. b) Evaluate the implications of a significant reduction in barriers to the trade and services for the global economy. 3)a) In 2002 the unemployment rates in Spain, France and Italy were significantly higher than in the UK. Examine the factors which might explain why the UK's unemployment rate was lower in these countries. b) To what extent might the pursuit of full employment conflict with other macroeconomic objectives? ------------------------------------------------- Exemplar: 1)a) 'The competitiveness of the Uk's manufacturing sector has declined in recent years'. Discuss the factors which may have affected the international competitiveness of UK goods. b) Evaluate the methods by which the UK's international competitiveness could be increased. 2)'Trading blocs are becoming increasingly important to the world economy' a) Discuss the benefits to a country belonging to a trading bloc. b) To what extent might the policies of the WTO conflict to those of trading blocs? ------------------------------------------------- June 02 1a) Examine the factors which have led to an increase in interdependence between countries in the world economy. b) Assess the impact on the global economy of the continued use by trading blocs...
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...An account of UK unemployment over the past 5 years Unemployment is a widely discussed problem, especially in recent years when the rate of unemployment has grown rapidly, mainly because of the global financial crisis of 2007-2009. The loss of a job is probably one of the most distressing events that could occur in the overall economy and in a person's life. This is a change not only in an economic sense, but in a psychological too. People inevitably depend on their earnings and a job loss in many cases means that they will not be able to maintain the same standard of living as before. Furthermore, the notion of future hardships has a great impact on the personality, as his or her common habits so far have to be somehow modified to suit the new lifestyle, based on the new income. This often leads to a psychological instability, triggered by a lowered self-esteem, and moreover, a decrease in morality levels which is the main reason why crime rates among young people are higher in the past five years. Apart from the impact on a personal level, there are some inevitable issues from an economic point of view, which derive from high unemployment and which inevitably affect the national economy. As we all know, the economic conditions of the country are absolutely vital to the ratio of unemployment. Every single event that has had an impact on the overall economy has affected the employment rates, whether positively or negatively orientated. It is of great importance...
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...Negative Impact of Economic Recession By Tejvan Pettinger on September 11, 2012 in economics A recession means a fall in GDP / national output. A recession will typically be characterised by high unemployment, falling average incomes, increased inequality and higher government borrowing. The impact of a recession depends on how long it lasts and the depth of the fall in output. The great recession of 2008-12 has shown many of the negative impacts of recession. Unemployment Not everyone is affected equally by a recession. A fall in GDP will cause a rise in unemployment. This is because: • Some firms will go bankrupt meaning all workers lose their jobs. • In an effort to reduce costs, firms will cut back on hiring new workers. Therefore, unemployment often affects young people the most. In this recession, unemployment in the UK has risen to over 2.6 million, though given the depth of the recession, you might have expected it to be even more (e.g. in 1980s, unemployment rose to over 3 million). However, in Europe, many countries in recession have seen a catastrophic rise in unemployment. With rates of over 20% in countries such as Greece, Spain and Portugal. [pic] Rise in Spanish Unemployment. Source ECB Lower wages Firms will also try to reduce costs by keeping wages low. Some workers (especially temporary workers without contracts may see wage cuts) This has been a key feature of the 2008-12 recession, also aggravated by rising costs of living. With...
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...Contents 1. Introduction 3 2. The evolution of house price in the UK and the factors affecting 3 supply and demand 3. The price and income elasticity of housing demand 9 4. Literature 11 1. Introduction The aim of this study is to explain the changes in the prices of houses by shedding light on factors affecting the demand and supply of houses in the UK. Firstly, we will look at the evolution of house prices in the UK since 2006 and examine relations between house prices and output, employment and mortgage interest rate. Also, supply of houses will be discussed by noting changes in the number of new houses and factors such as land cost, building cost. Then, in the next section we will proceed to examine the factors affecting the sizes of different elasticity of demand 2. The evolution of house price in the UK and the factors affecting supply and demand Over the last four decades, the UK housing market has been subject to boom/bust cycles and Stephens (2011) indicates that UK has one of the most persistently volatile markets in the world. Especially, since 1997 there has been a record growth in UK house prices. The above chart indicates that there are significant fluctuations the in UK housing market. House prices experienced steady growth during both 2006 and 2007 and reached their peak in late 2007. As the end of the 2008, the average house prices...
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...Part 1) Current | Boom / Economic growth | Recession | Country - % - Year | Country - % - Year | Country - % - Year | GDP Growth rateUK – 0.5% 2015CHINA – 1.8% 2015 | UK – 1.5% 1983CHINA – 11.7% 1978 | UK – 0.3% 2008CHINA – 9.2% 2009 | Inflation rateUK – 0.1% 2015CHINA – 1.3% 2015 | UK – 4.6% 1983CHINA – 8.3% 1978 | UK – 3.61% 2008CHINA – 0.9% 2009 | Interest rateUK – 0.5% 2015CHINA – 4.35% 2015 | UK – 9.8% 1983CHINA – 7.5% 1978 | UK – 5% 2008CHINA – 2.52% 2009 | Unemployment rateUK – 5.3% 2015CHINA – 4.05% 2015 | UK – 2.6% 1983CHINA – 4.9% 1978 | UK – 5.4% 2008CHINA – 4.2% 2009 | Describe how the current economic environment is impacting on your two chosen Businesses (P5 - Part 2) TESCO Tesco is negatively affected by economic elements because it affects its price profits and the cost of its products and services. Unemployment rate is one of the factors that affect the company’s profitability. Unemployment decreases the demand for its products and services and in the end, its profitability. Unemployment is a major concern to the company because it is beyond its control. It affects its marketing opportunities and its overall performance in local and international markets. Even though Tesco is expanding its operations globally, it doesn’t make the profits it would be able to make because of unemployment. Its income over the past few years have greatly increased but since it is largely dependent on UK market; unemployment rate in the country will...
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...UK economy trend and retail market situation Distinctive feature of economic life in the UK at present time is a financial and economic crisis and its consequences, which took a severe stroke to banking system. Problems in the financial sector were followed by difficulties in other sectors of the economy, and as a result, production was reduced, unemployment was increased, consumer demand sharply was reduced, the real estate market was deteriorated, the British currency felt to its lowest level in 25 years. In the second half of 2008 UK economy entered a recession, and in the first half of 2009 UK GDP declined by 4.4% compared to the same period in 2008. However after the very strong downturn, UK's economy began to show signs of recovery since the second half of 2009. Macroeconomic statistics for 4th quarter of 2009 gave cause for optimism: the first time since the beginning of crisis weak growth of 0,3% had been recorded (Table 1.) Table 1. GPD Growth (www.statistics.gov.uk) |[pic] | Household Consumption first time after the crisis has become positive in Q3 of 2009 growing by 0.1% (Table 2.) Table 2. GDP by spending (Economic & Labor Market Review, Jan’10) [pic] The rate of inflation in UK has been slowed down in 2009 due to the decrease of demand caused by economic weakness. However there was sharp increase since...
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...The sovereign debt crisis in the Eurozone, also called euro crisis of the Euro area, is a series of events that have affected negatively from the beginning of 2010 to the 16 European Union member states that make up the Eurozone, that have adopted a single currency and interweave a multinational monetary union within the EU. During this period the states of the Eurozone have been suffering a crisis of confidence without precedent, with speculative attacks on government bonds of various members, turbulent financial and stock markets and a falling exchange value of the single currency, in a context of uncertainty and difficulty to reach a collective agreement that still persists. In this paper, I will discuss some of the impacts that the crisis had over the Eurozone countries. In the last 6 months, the Euro had depreciated around 6 percent, making the exchange rate $1.38/€. This depreciation has caused an improvement in the European exports and a decrease in price for the imports in petroleum. The Euro/Dollar exchange rate touched a minimum on June 2010, when the rate is $1.19/€, and it touched a maximum on May 2011, when the rate was $1.48/€. According to an article from the Financial Times, “the first beneficiaries of a weaker euro are the countries of southern Europe whose difficulties have been putting the future of monetary union in doubt. Greece has been the focus, but Spain, Portugal and Italy also face a sharp loss of competitiveness”. Greece is the country that will benefit...
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...all goods and services produced in an economy in a given price level and time period. AD = C + G + I + (X – M) C means consumer expenditure. This makes up the majority of AD in most countries (about 65% of the total). I means investment in capital goods from firms, and this is the most volatile component of AD. This typically accounts for 15-20% of GDP, and the majority (75%) is from private sector businesses. G means government spending on state-provided goods and services. Transfer payments (state benefits) do not count because these payments are not producing an output – they are a transfer of money from one group to another. X means exports; M means imports. Exports are goods sold to overseas countries and imports are what the UK buys from foreign countries. (X – M) represents net exports. If this is positive, there is a trade surplus which adds to AD. Conversely, a negative net exports value means there is a trade deficit, which reduces AD. Consumer Expenditure Consumer expenditure is influenced by… The amount of real disposable income is the main influence on consumer expenditure. Households and economies with more disposable income tend to spend more in total than poorer ones. The proportion of income that is spent is called the average propensity to consume (APC). Wealth (the value of a stock of assets) affects C. Wealthier people tend to spend more. Wealth can be spent and can be used to borrow against. It also results in greater consumer confidence....
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...global financial crisis of 2008/10. Evaluate the impacts of this crisis on EITHER a) a country of your choice OR b) a business of your choice. In this assignment I will be discussing the factors that caused the global financial crisis of 2008/2010 and will be evaluating the impacts of the crisis on the UK economy. Firstly a recession is defined as a period of negative economic growth for two consecutive quarters. This means there is a fall in National Output and National Income. Inevitably a recession will involve higher unemployment and an increase in government borrowing. (Economic help, 2008, www.economicshelp.org, accessed on 24/11/2010) The financial crisis of late was caused by factors including, subprime lending, complex financial systems, greed, high oil prices, globalization and the collapse of the Lehman brothers. All of these factors will be explored throughout. Subprime mortgages are a big factor when talking about the recession, Justin Pritchard states that subprime refers to a borrower that is not prime. These are borrowers who might be less likely to repay a loan and therefore default. Subprime borrowers may be classified as subprime. Banks offered loans to people in the subprime category often putting more interest on the loans as they are a greater risk for the bank however the banks were happy to take on the risk as they could receive a greater interest rate back. These subprime mortgages were to have a big impact on the banks. As these loans raised interest rates...
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...Assess the consequence for the UK economy of a significant fall in investment spending. (25) Investment is the spending on adding to the capital goods. The UK economy is assessed by its macroeconomic objectives such as economy growth, unemployment, inflation and trade. The change in investment will affect the UK’s economy both in short term (changes in AD) and long term (changes in productive possibility LRAS). Extract B line 8-10 suggested that ‘Weaker demand makes investment less profitable and uncertainty about the severity of the recession leads companies to delay spending on investment projects.’ This means that the decrease in investment is caused by the lack of confidence in the economy, if households confidence to consume decreased it will lead to a decrease in consumption and the willingness for firms to invest depend on the level of consumption, if level of consumption decreased , investment will also decrease. Extract B line 12-13 also suggested that ‘Confidence in the banking sector has been knocked so severely that banks are keeping very tight controls on their lending to companies.’ As the confidence in the banking sector decreased, this will limit the credit availability to the firms, many companies invest using loans from the bank, as the availability of credit decreased it will lead to a further decrease in investment. In the short term, investment is a positive component of AD and a fall in investment will lead to a leftward shift for AD curve. As AD move...
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...stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business. Identifying PEST influences is a useful way of summarising the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences. Political – these factors have a direct impact on the way a business operates. Decisions made by government affect our everyday lives and can come in the form of policy or legislation. The government’s introduction of a statutory minimum wage affects all businesses, as do consumer and health and safety laws and so on. Economical – businesses are affected by these factors nationally and globally. Interest rate policy and fiscal policy will have to be set accordingly. Within the UK the climate of the economy dictates how consumers may behave within society. Whether an economy is in a boom, recession or recovery will also have an effect on consumer confidence and behaviour. An economy that is booming is characterised by certain variables. Unemployment is low, job confidence is high, and because of this confidence spending by consumers is also high. This has an impact on most businesses. Organisations have to be able to keep up with the increased demand if they are to increase turnover. An economy that is in a recession is characterised by high unemployment and low confidence. Because of high unemployment spending is low, confidence...
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...all the characteristics of the UK economy, government fiscal and monetary policies and how each one effects on the Tesco PLC organisation. I plan to give a clear and comprehensive look into each of the factors which build the UK economy and analyse and evaluate with strong evidence of application to theory throughout the report. The UK has a democratic, parliamentary system of governance known as the Westminster system. The structure of the administration ensures that there is an adequate separation of powers between the executive branch, led by the prime minister, the bicameral legislature and the judiciary, and that there is a system of checks and balances in place. The current population of the UK is 64.1 million. The UK was one of the largest macroeconomics in the world. It was seen to be one of the strongest and most stable economies before 2007, however post 2008 economic deceleration began and the GDP growth rate fell to 0.7%. In 2008, the economy entered into a recession, with a predicted negative growth rate of -4.5% for the following year. (Data monitor Statistics) The current conservative government’s main economic aims are Economic growth with more goods and services produced in the economy, alongside low inflation, little unemployment with a Fair distribution of income. (HM Treasury) Taxation comes in two forms direct taxation (taxation on income and profits) and indirect taxation this is taxation on expenditure (VAT, excise duty). The UK government spends in the region...
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...General Certificate of Education Advanced Subsidiary Examination June 2013 Economics Unit 2 ECON2 The National Economy Friday 17 May 2013 1.30 pm to 2.45 pm For this paper you must have: an objective test answer sheet a black ball-point pen an AQA 8-page answer book. You may use a calculator. Time allowed 1 hour 15 minutes Section A (ECON2/1) Answer all questions on your objective test answer sheet. Use a black ball-point pen. Do not use pencil. Do all rough work in this question paper, not on your objective test answer sheet. Section B (ECON2/2) Answer EITHER Context 1 OR Context 2. Use black ink or black ball-point pen. Pencil should only be used for drawing. Write the information required on the front of your answer book. The Examining Body for this paper is AQA. The Paper Reference is ECON2/2. Information The maximum mark for this paper is 75. There are 25 marks for Section A. Each question carries one mark. No deductions will be made for wrong answers. There are 50 marks for Section B. The marks for questions are shown in brackets. You will be marked on your ability to: – use good English – organise information clearly – use specialist vocabulary where appropriate. Advice You are advised to spend no more than 25 minutes on Section A and at least 50 minutes on Section B. G/T90774/Jun13/ECON2 6/6/6/ ECON2 2 Section A: Objective Test Answer all questions in Section A. Each question carries 1 mark. No deductions will be made for wrong...
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...assets with similar risk ratings; but, when house prices began to fall, foreclosures on mortgages increased. To make matters worse investors had concentrated risks by leveraging their holdings of mortgages in securitized assets, so their losses were multiplied. Investors realized that they had not fully understood the scale of the likely losses on these assets, which sent shock waves through financial markets, and financial institutions struggled to determine the degree of their exposure to potential losses. Banks failed and the financial system was strained for an extended period. The banking system as a whole was strong enough to take these entities onto its balance sheet in 2007-08, but the effect on the demand for liquidity had a serious impact on the operation of the money market. Credit Crunch According to BBC, Credit Crunch defined as “severe shortage of money or credit” which was one of...
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