Structure and Operation of the UK Economy and its Impact on Hospitality Industry

EXTERNAL BUSINESS

1.1 STRUCTURE AND OPERATION OF THE UK ECONOMY
 The economy of UK is the most globalized economy of the globe. It is
considered as the fifth largest national economy in terms of GDP and is
the second largest in EU.
 The UK economy is composed of economies of England, Wales, Scotland
and Northern Ireland.
 The economy is expected to grow at a rapid pace than its G7 peer nations
as per the recent studies of International Monetary Fund (IMF).
 According to the data of the year 2014, UK was the fifth largest importer
and ninth largest exporter in the world. Besides this, it has the second
largest inward as well as outward foreign direct investment.
 It has been observed that the service industry dominates UK economy
which contributes nearly 78 percent of GDP. Among service sector,
financial services play very vital role in the economic growth

CONTD...
 British Economy is exercised by HM Treasury and the Department for
Business, Innovation and Skills.
 The Bank of England is the central bank of UK and is responsible for
controlling the flow of money in UK economy by using tools like monetary and
fiscal policies.
 Taxation policies include payments at two levels of government; one is at local
and other is at central government.
 The central government earns revenues mainly from income tax, corporation
tax; val
 ue added tax, fuel duty and national insurance

1.2 CURRENT GOVERNMENT ECONOMIC POLICY AND ITS
EFFECT ON BUSINESS AND SERVICES INDUSTRIES
 The economic policies in UK are formulated by national governments, Bank of
England and its Monetary Policy Committee in order to regulate the operations
and services of services sectors that also include hospitality industry.
 It can be analyzed that after the devastating economic crisis of 2008, leading
economists of UK lay emphasis on incorporation of stringent corrective
measures in order to combat the adverse effects of global financial recession.
 The Bank of England has reduced the interest rate to 1 percent in order to
facilitate lending and making finances rapidly available to hospitality
organizations