Business Economics: Growth and Development of the UK Economy

This report analyzes the growth and development of the UK economy in the field of business economics. It explores the background of the UK economy, evaluates the issues affecting economic growth, and examines the role of the government in supporting business advancement. The report provides insights into the financial sector, gross domestic product, infrastructure, and government policies.

Business
Economics

EXECUTIVE SUMMARY
Business economics can be described as applied economics which can be utilised for
analysis of factors that contributes to relationship of factors along with labours, products or
capital markets. Overall business economic concerns about issues or problem that is related to
organization, management or strategies of an enterprise.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background of United Kingdom along with economic growth or development:........................1
Detailed evaluation of problem of economic growth:.................................................................2
Role played by government for advancement or success of business in nation:.........................3
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................5

INTRODUCTION
Economics can be described as a social science that concerns on production, distribution
as well as consumption of products that is required for fulfilling requirements of customers with
optimum allocation of resources. Business economic involves study of financial, environmental,
organizational or market related issues that is faced by corporations. It assess various factors that
pertains impact on expansion strategies of business by utilizing theories or quantitative methods
of economics (Adachi and Hisada, 2017). This report is based on analysis of business economic
factors of United Kingdom and selected title for it is growth or development of economy of
country. It covers description of economic background of United Kingdom and evaluation of of
economic framework for growth or expansion along with appropriate data and graph that is
applicable. Apart from this, role of government for advancing success of business in a country is
analysed.
MAIN BODY
Background of United Kingdom along with economic growth or development:
UK Background: From analysis of economy of United Kingdom it can be stated that it
consists largest market of world in context to management of fund. Overall record of assets of
United Kingdom is of 11.8 trillion US dollar in 2017. Country plays an essential role in context
to specialist areas of financial services, for example, banking. It can be referred as most
innovative, dynamic or sophisticated nation in relevance to finance. From data of United
Kingdom it can be analysed that more than 50,000 employees works in financial sectors or areas
of finance related services. Contribution of nation's sector of fund management contributes 0.8
percent of its gross domestic product (Antonietti and Gambarotto, 2020). Apart from this,
country consists large number of investment centres for private wealth. Large number of
companies are attached with it and hence, it can be stated that nation pertains wide financial
market. United Kingdom incorporates second largest banking deposits around globe after
economy of United States. Almost 20 percent of total global economy is covered by it and it
provides high amount of rate of return as compared to another developed nation of advance
economies. It also plays largest role in investment or banking. As compared to another largest
economies, United Kingdom consists more foreign banks. London city of country have branches
or subsidiaries of 254 in context to foreign banks which is double in comparison to New York.
1

Development of economy can be explained as advancement of nation in relevance to its
infrastructure, finance, government, education or businesses. It relates to enhancement of
production activities of goods or services. Apart from this, business cycle is discovered and
analysed. In relevance to economic development of United Kingdom, it relates to growth or
development of its financial sector, gross domestic product and infrastructure. United Kingdom
incorporates largest economy with advancement in banking sector and various other financial
institutions. Gross domestic product of United Kingdom improved from 0.4 percent in October
of 2020while it was 7.9 percent in February of 2020 (Blythe, 2017).
2

Detailed evaluation of problem of economic growth:
Illustration 1: Economic growth Issue, 2020
(Source: Economic growth Issue, 2020)
One of the major problem that is faced by United Kingdom is that economic growth of
country is weak. Output of country is below its trending growth rate. Reason behind low growth
rate of productivity is decrement in number of outputs produced and low level of demand in
nation. While considering economic growth rate of nation in the year 2019 it is identified that
economic growth of UK was below 1 percent. Declining real wages serves as a reason for
decreasing economic growth of country (Economic growth Issue, 2020). It ultimately leads to
decrement in standard of living of citizens (Brückner and Pellegrino, 2016). As, debt ratio of
3

government is increases because of which burden is increasing on government as ratio of debt to
gross domestic product is rising.
Illustration 2: productivity for Labour, 2020
(Source: productivity for Labour, 2020)
Growth rate of nation is decreasing due to its reducing productivity rate. It serves as a
reason lowering wage rate of country which comes up as a challenge for government of country.
It is reason of low standard of living of people and decrement in tax receipts (productivity for
Labour, 2020). It limits government in spending high amount of money on public services or
health care.
4

Illustration 3: debts for government, 2020
(Source: debts for government, 2020)
Debt factor associated with government is increased from 40 percent of gross domestic
product to 82 percent of gross domestic product. Tax revenue earned by country has fallen in
comparison to prior decades, while on the contrary, spending of government on pensions or
health care is rising. It is one of the major reason for reduction in economic growth as
expenditures are increasing while revenue earning is falling. Decrement in employment rate of
nation is also a reason for reduction in earning through tax. Rising of debts pertains huge impact
on politics of nation and serves as a reason for limiting spendings of United Kingdom's
government on enhancement of country through spending on various sectors such as,
infrastructure development (debts for government, 2020).
5

For maintenance of better economy, country is required to invest in various sectors, such
as, socio economic, industry, education, agriculture, and infrastructure. Apart from this, large
amount of money is spend on health sector, enhancement of transportation facilities,
communication, power and energy. Reason behind low level of development in United Kingdom
is less concentration on important measures, that is, gross domestic product, trade relations,
infrastructure, employment etc.
Role played by government for advancement or success of business in nation:
Government plays an essential role in business advancement as it provides various types
of support to enterprises. As, nation provides productive employees to business, along with it,
educational professional, financial schemes, trade relations and various other facilities.
Government make policies for betterment of business activities which encourages organizations
to expand or grow its operations at large level. Positive trade relations of government with other
countries further helps entity in expanding its customer base and enhance its brand recognition
across borders (Devine and et.al., 2018). Steps which are taken by government for protection of
rights of customers, boosts confidence f customers in context to purchase of products. Following
such customer policies helps enterprise in improving satisfaction level of customers as well as
boosts loyalty of consumers towards brand. Apart from this, various subsidies are provided by
government to start-ups or small organizations for the purpose encouraging them to expand their
business operations. Change in policies of government imposes huge impact on activities of an
organization which is operating in country. Along with above mentioned facilities, government
also provides loans to business at low rate of interest and provides tax support for boosting
business activities in nation.
Several roles that are played by government of United Kingdom for supporting
enterprises or businesses are described below:
 Supports small or medium organizations: Such enterprises provides huge level of
economic support to a country , hence, plays an essential role in its economic
development. Because of this reason government of UK provides various facilities for
encouraging activities of start-ups in nation (Frey and Gallus, 2017). Some of such
facilities are enabling interest at low interest rate, providing mortgage free loans etc.
 Technological support: Government provides huge support to organizations in context
to providing new technologies which increases productivity and efficiency of entity and
6

simplifies production of goods or services. It increases economies of scale of a enterprise
as implementation of digital and economic support to business helps in producing large
amount of output in less time with similar quality standard. Innovative alternatives also
helps management team of organization in enhancing customer experience (Nelson,
2020).
 Trade relations: Government of United Kingdom helps in expanding operations of an
enterprise at wide level by by providing international exposure by maintaining positive
trade relations. It helps company in attractive large segment of customers across borders
which enables improvisation of customer attractiveness at international level. Apart from
this, brand image and brand value of an enterprise also improves which ultimately leads
to enhancement of investors attractiveness that helps in expansion of business.
CONCLUSION
Above report concludes that business economics can be explained as subject that
encompasses concept of production factors, scarcity, consumption and distribution. It involves
study of choices of government regarding resource allocation. Growth of economy can be
explained as its development in context to several factors such as, employment, infrastructure
and education. Further, this report interprets that several reason are there for decrement ot falling
in rate of economic growth, such as, increase in level of unemployment, lowering of
infrastructure activities, etc. Apart from this, reduction in tax income and increase in debts of
government leads to impose negative impact on nation. Along with it, government plays a major
role in advancement of enterprise or business activities in country which helps in economic
development.
7

REFERENCES
Books and Journal:
Adachi, T. and Hisada, T., 2017. Gender differences in entrepreneurship and intrapreneurship: an
empirical analysis. Small Business Economics. 48(3). pp.447-486.
Antonietti, R. and Gambarotto, F., 2020. The role of industry variety in the creation of
innovative start-ups in Italy. Small Business Economics. 54(2). pp.561-573.
Blythe, J., 2017. Business to business marketing management: A global perspective. Routledge.
Brückner, S. and Pellegrino, J. W., 2016. Integrating the analysis of mental operations into
multilevel models to validate an assessment of higher education students’ competency
in business and economics. Journal of Educational Measurement. 53(3). pp.293-312.
Devine, P. J., and et.al., 2018. An introduction to industrial economics (Vol. 14). Routledge.
Frey, B. S. and Gallus, J., 2017. Honours versus money: The economics of awards. Oxford
University Press.
Nelson, J. A., 2020. Economics for (and by) humans. Review of Social Economy, pp.1-14.
Online
Economic growth Issue. 2020. [Online]. Available through < https://www.economicshelp.org >
productivity for Labour. 2020. [Online]. Available through < https://www.economicshelp.org >
debts for government. 2020. [Online]. Available through < https://www.economicshelp.org >
8