1.2 Government policy and their impact on service industry Local body of UK emphasizes on developing the rules and regulations because in hospitality industry, each and every venture is competing with one another. Moreover, with the completion of a specific time schedule, they usually change their policies and by taking these changes into consideration, hospitalityventurealsomodifytheirpolicies.Further, government of UK also develop the fiscal and monetary policy and by making sudden changes in these policies, it has a drastic influence on the business firm. Moreover, the government economic policy is majorly of two types. These are stated in next slides:
Continued... Fiscal:In the fiscal policy, UK government adjusts the level of spending in order to regulate the national economy in proper way. This policy includes the fluctuation of tax rates on various commodities in service sector. Fiscal policy is majorly of two types and these have been further discussed down under: Contractionary fiscal:Contractionary fiscal policy comes into play when the expanding of individual is much lower than the tax revenue. This policy is only taken when the government has burden of paying the debt. Expansionary fiscal:Under Expansionary, government of UK focuses on accelerating the demand for different types of goods and services within the nation. This policy is considered by government only when country is going through recession.
Continued... Monetary:Monetary policy is regulated by the Central or Federal bank in order to manage the rate of interest and supplyofmoneywithinwholeUK.Further,when government make any changes in the rate of taxes then it eventuallyinfluencesthefunctioningofthehospitality venture. Moreover, if the rate of interest goes down then they will face problem because the cost of capital will eventuallygethighandbytakingthisaspectinto consideration, clients will tend to spend less. This will majorly impact the performance of the hospitality firm.
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