The Impact of Inflation on Business Success in the UK

This report examines the impact of inflation on business success in the UK. It covers the background of the UK economy, the definition of inflation, and how it affects consumer purchasing and business stability. It also explores the role of the government in managing inflation and promoting business success. The report provides insights into the relationship between inflation and business growth in the UK.

ECONOMIC
REPORT

Executive Summary
In UK which is a market oriented economy and GDP is projected which is still 5% and
decrease their revenues. To understand this assessment various topics have been covered which
are named as inflation, how inflation should affect business for success in a country and role of
government which involve inflation to play a business success in country.

Table of Contents
Executive Summary........................................................................................................................2
INTRODUCTION...........................................................................................................................5
MAIN BODY...................................................................................................................................5
1. Define background of UK and inflation .................................................................................5
2. Critical analysis how inflation affects the success of business in country .............................6
3. What are the role that government plays business success in country...................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The term economic report consist of data which are related to statistics and describing a
actual economy which includes gross national product, their gross expenditure and national
income should be included (Booth, 2018). Selected country is united kingdom (UK ) and for this
assessment chosen topic is inflation. In this report, various topic are covered such as general
information about interest rates, how they could affect success of business in country and role
which could government play for advance success of business in this nation.
MAIN BODY
1. Define background of UK and inflation
The history of united kingdom is unified state into being in 1707 UK Britain or England.
It can consists of corporate body such as England, Scotland, Northern Ireland and UK is a
unitary parliament nations (Dwaikat and Ali, 2018). Before start of 16th century, many number of
states have been reduced such as England ad Scotland. The UK economy is one of main largest
producing nation in world with an significant civil industry and pharmaceutical industries are
there. Agricultural sector of this nation is 0.6% of gross domestic product and they can manage
to produce through to meet around 60% of food demand. Vast majority of UK in gross domestic
product are should be generated by service sector and travel and tourism industry of this nation
are continuously keep going well. The economy of united kingdom is market oriented economy
and it would be measure fifth largest national economy in the world. UK is most global
economies which is highly developed social market and highly comprises in England, Scotland
and Wales.
Inflation means prices are increased for goods and services for daily used purpose which
are named as food, clothing, transport, household facilities and many more. The purchasing
power of customers are decline over a specific period of time because customers purchasing less
as compare to other days if prices are high and inflation is there. It is a rate which value of
currency are down at broad price level of goods and services. Some percentage are given for
increase or decrease their specific period of time and these percentage should tells about how
much prices are fluctuated over a specific period of time. Through this inflation, it can also
measures financial problem because it can affects consumers in the economy. In UK based
economy, inflation encourages people to buy products that would makes it easier for firms. In

case of central banks, have an inflation target between 2 and 2.5 % and bank of England have co
comprises their price between 2%. Inflation should be measured in three estimated of inflation
such as consumer price index, retail prices index and consumer price index of housing costs. In
England it is key factor which is based on interests rates that's why bank can charge people to
borrow money and what should they pay their savings. The effects of inflation consist of reduced
their commodities which will impact that standard cost of living in nations. If inflation is high in
country then cost of living gets higher and it displays the level of inflation in economy.
2. Critical analysis how inflation affects the success of business in country
Inflation can affects business in country because when price of goods and services are
that will impact of entire economy (Hall, 2020). If inflation is become too high in economy then
all economy have suffer consumers also have more money to buy various goods and services
which benefits to grow their economy. Inflation is general price level should affect according to
their economy and increasing or decreasing in any percentage on economy for each and every
year. Government push their bank of England to obtain a target inflation rate 2 to 2.5% each
year. If there is increasing a inflation in business which could affect the profitability and spend
on production. Moreover, it is better to increase their prices in business instead of increase their
consumers should respond negatively so that firms can affect success for growth of country.
Some small business are attentive towards an inflation when if there in any changes in inflation
whether it is rising or falling business gives an higher production spends in profitability. The
effects of inflation should be determine their firms sales and their stability of business in success
for growth.
Inflation could affect country when priced of goods and services are high then whole
economy has affected. If inflation becomes too high in country then consumer are wont be able
to buy any products or services and whole economy should be suffer. If there is inflation can be
control level then many economy have expand their business and it should be controlled rising
level and employment should be increase (Jordà, Singh and Taylor, 2020). Many of people
have job in hand and higher profits are there, better investment which will impact more
productive uses in country. Inflation has a major problem in most of the countries mainly during
this pandemic situation many of consumer suffer more related to price level because suddenly
most of things have increase their prices so consumer do not buy much products. The impact of
inflation in country affects profits for any firms which will decline the prices of goods and level

of costs. They can affect business because of growth rates in economy tends to be more inflation
rates if savings or investment should have to be grow. Inflation affect business due to many
reason are as follows:
Consumer purchasing: This is a way to success inflation growth of business success in
country and there are chances to reduced their loss (Li and Mutchler, 2020). If there is increase
their prices then consumer wont be able to purchase more products instead of they can afford
things. If they decrease their prices then consumer are more attract towards as compare to other
competitors which will impact leads to success in country.
Changes in price: When prices of goods and services are fluctuate firms can spend
money changing price to list their correct prices. If business can predict their prices which will
impact that they already know their how much they will charge in every product to spend more
in items. If rate of inflation is high then prices are also high then consumer do not buy any
products because of their prices are high. It makes it very difficult when purchasing power are
low and consumer won't be able to purchase more products because price are fluctuating day by
day.
3. What are the role that government plays business success in country
Government also plays a success in economy because if they have an higher
inflation then they involve buying and selling of government debts in marketplace

(Schröder and Storm, 2020). The fed affect economy through monetary policy which
compasses of money supply and interest rates. UK government can change their
business work and it may be influence economy either it is laws or changing any taxes
in economy. When rates are higher due to inflation then government decreases the
money supply and increase interest rates. The main role of government which plays a
business success to protect customer in forms of when owners fails to honor their
guarantee. It should provide their legal framework or social framework to maintain
competition and stabilize their economy. During period of time, government activities
have changed with each of functions should be expanded. They can spend extra
spending for those consumers who have paying their high taxes before inflation and
lower taxes should reflect more demand in economy which an lead to higher output. It
should pass legislation to protect their consumers or customers when business can build
new assumptions. In case of inflation, government role for success of economy through
revenue and taxation where at all levels of economy and their results to most important
part of government budgets (Seamans and Raj, 2018). It is mandatory that firms can
makes financial information to protecting their rights of consumers or investors and it
can also facilitates for upcoming investments. Government influences business activities
through fiscal policy like use of taxation and spend a lot of economic conditions which
would be enhance to tax. They can produce goods and services which include road and
defence and half of federal spending is dedicated to more production of products or
services and they collect taxes for those customer who have higher income in case of
inflation they will attract towards an economic behaviour.
CONCLUSION
As per above information, it has been understood that economic is concerned with
distribution and consumption of products or services. This report consist of data should be
represent an actual economy which include GDP and national income also effects stock national
health. In this report, several topic are covers such as inflation, how inflation affects success of
business country and role of government plays business success in country.

REFERENCES
Books and Journals
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Dwaikat, L. N. and Ali, K. N., 2018. The economic benefits of a green building–Evidence from
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Hall, P. A., 2020. The political power of economic ideas: Keynesianism across nations. Princeton
University Press.
Jordà, Ò., Singh, S. R. and Taylor, A. M., 2020. Longer-run economic consequences of
pandemics (No. w26934). National Bureau of economic research.
Li, Y. and Mutchler, J. E., 2020. Older adults and the economic impact of the COVID-19
pandemic. Journal of Aging & Social Policy. 32(4-5). pp.477-487.
Schröder, E. and Storm, S., 2020. Economic Growth and Carbon Emissions: The Road to
“Hothouse Earth” is Paved with Good Intentions. International Journal of Political
Economy. 49(2). pp.153-173.
Seamans, R. and Raj, M., 2018. AI, labor, productivity and the need for firm-level data (No.
w24239). National Bureau of Economic Research.