Business Economics Report: UK Economic Problems and Government Role

This report provides an in-depth analysis of business economics within the context of the United Kingdom. It begins with an executive summary and introduction, followed by an overview of the UK's economic background, highlighting its position as a major global financial market and its reliance on international operations and financial services. The report then delves into the specific economic problems faced by the UK, such as low economic growth rates, decreasing productivity, rising government debt, and the impact of these factors on employment and living standards. The role of the government in promoting business success is also examined, emphasizing technological support, the boosting of small organizations, and international trade management. The report concludes by summarizing the key findings and reiterating the vital role of government in fostering a favorable environment for business and economic development, with references to relevant academic and online sources.

Business
Economics

EXECUTIVE SUMMARY
This report is all about business economics which refers to customers spendings and
government income by business life cycle. Economic growth and development is done by price
stability, better infrastructure, technology etc. government supports businesses in various way by
providing subsidies, spendings in MSMEs, trade services etc. which leads to advancement in
business success and which leads to economic growth and development.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background of UK and its economy:...........................................................................................1
Details regarding economic problem of country:........................................................................2
Government role for advancement of business success:..............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Economic refers to a social science that is concerned with activities of production,
distribution, as well as consumption, of products and services that plays a vital role in fulfilment
of customer needs. Economics involves study of business, government or individual in context to
their choices for allocation of resources. Business economic can be defined as application of
economic theory as well as quantitative methods for the purpose of analysing its effect on
business. Focus of business economics is on issues or problems which are related organizational
factors, strategies, as well as management of an enterprise (Albort-Morant and Ribeiro-Soriano,
2016). Basis of this report is evaluation of business economics in relevance to United Kingdom.
Selected title for the report is economic growth or development. Further, this report covers
various topics such as, analysis of background of United Kingdom, economic problem which is
faced by country, methodology for identification and analysis of such economic issues. In
addition to it, role of government is analysed for advancement or success of business.
MAIN BODY
Background of UK and its economy:
United Kingdom Background: Economy of United Kingdom is termed as largest
economic market in world in context to management of fund in nations such as, United States
and Japan. Overall records of assets of United Kingdom states 11.8 trillion US dollar in the year
2017. International operations serves as a strong sector in economy of United Kingdom because
country trades a wide range in international markets. Financial services, such as bank services
plays an essential role in nation's economy (Ayyagari, Demirguc-Kunt and Maksimovic, 2014).
Nation proves to be most dynamic as well as innovative in relevance to its financials. Reason is
that more than 50,000 people are employed or serving in financial sectors. Sector of fund
management in United Kingdom contributes almost 0.8 percent in gross domestic product in the
year 2007. Further, nation pertains most of large centres for private wealth investment. Financial
market of UK is wide as large number of organizations are incorporated with it. After, economy
of United States, UK showcases second largest banking deposits. Almost 20 percent of its global
economy as well as banking sector provides higher return on capital of United Kingdom for the
purpose of its economic growth or development. It is highly focused on private or investment
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banking. London incorporates various subsidiaries or branches, that is, 254 foreign banks. This
stated number is approximately double as compared to New York.
Economic development or advancement can be defined as economic enhancement of
country in relation to business, finance, government, finance etc. It relates to increment in
production which is influenced by growth or expansion in sector of finance, gross domestic
product, or infrastructure. United Kingdom incorporates largest economy that is advance in
sector of banking as well as another financial institutions. Gross domestic product of United
Kingdom is improved by 0.4 percent in October of 2020 while on the contrary, its gross domestic
product was evaluated 7.89 percent lower in February of 2020 (Colombelli, Paolucci and
Ughetto, 2019).
Details regarding economic problem of country:
One of the major issue faced by United Kingdom is its low growth rate of economy as its
output level is below trending growth rate (Friedman, 2016). Therefore, decrement is level of
output serves as one of the major reason behind low rate of productivity growth and hence,
weakness demand level. In the year 2019, economic growth rate of nation stated lower than 1
percent. Reasons for this economic decrement is falling of wage rate, it also impacts negatively
on standard of living of people (Economic growth, 2020). Debt ratio of government is also
increasing hence, reduction of its burden on gross domestic product of nation serves as a
complex task.
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(Source: Economic growth, 2020)
Productivity of nation is decreasing or falling in context to its trend or growth rate. Low
productivity or growth rate serves as a reason for lowering wages of employee, further, it also
negatively impacts employment rate as well as living standard of country. It also hampers buying
capacity of customers which negatively impacts business that are operating in country. Apart
from this, tax receiving capacity of government is also affected due to this reason (Labour
productivity, 2020).
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Illustration 1: Economic growth, 2020

Illustration 2: Labour productivity, 2020
(Source: Labour productivity, 2020)
Debt of government is increased from 40 percent of gross domestic product to 82 percent
of gross domestic product. By analysing prior time period it is evaluated that revenue generated
within country is falling while tax rates imposed by government is increasing. Further, spendings
of government is also improving in context to healthcare as well as pensions for public. Hence,
revenues earned from taxes are also decreasing (Keller, 2015). This serves as a reason for
decrement in economic growth because high level of public spendings of government decreases
its income margin. Rising debts can negatively effect productivity of nation as well as its
government political strategies. It comes up as a limitation for government in relevance to
spendings on infrastructure development or business enhancement (Government debts, 2020).
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Illustration 3: Government debts, 2020
(Source: Government debts, 2020)
For the purpose of maintaining or improving economic position of country, it is important
to invest in sectors such as, agriculture, education, infrastructure, industry or socio economic.
Therefore, government spends large amount of funds on power and energy development,
enhancement of country's transportation facilities, eduction sector improvement, increment in
health sector, etc. Major reason incorporated with low economic development is low level of
concentration of government on areas such as, taxation, trade relations, gross domestic product,
employment, infrastructure etc. It serves as a reason for low level of economic development.
Development of economy relates to growth or expansion in sectors of finance, gross domestic
product or infrastructure (Parker, 2018). Additionally, it is interpreted that financial institutions
or banking sector consisted in economy of United Kingdom is highly advanced.
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Government role for advancement of business success:
Role of government in advancement or success of any business is major or essential.
Reason is that government of nation supports or boosts operations of businesses incorporated
with it in various ways. It enables organization to incorporate productive or efficient employees,
managing trade relations, enhancement of educational professionals and providing loans which
are mortgage-free. Apart from this, various financial schemes are launched by government which
helps in boosting financial position of enterprises. Government make various policies for
enhancing activities of business in country (Plotnikova, Romero and Martínez-Román, 2016) .
Management of trade relations by government of nation helps company in expanding world wide
and globalising its operations. It enhances base of customer for an organization and provides
opportunity to business for improvement of its sustainability and recognition in international
market. It also improves brand value and image incorporated with an organization. Protection of
customer rights is also ensured by government of United Kingdom which boosts reliability as
well as satisfaction level of customers. Government pertains various policies for agriculture,
taxation etc. for boosting business activities in country. Role of United Kingdom's government in
supporting and ensuring success of organizations:
 Technological support: Government of United Kingdom provides technological support
to enterprises as it ensures implementation of advanced technology in business. This
helps entity in attaining better productivity. Reason is that production capacity of an
organization increases by application of advanced equipment. This leads to increment in
output level of products, further, quality of goods is also standardised. Hence, is pertains
huge impact on success of business.
 Boosting small organizations: Government of United Kingdom ensures enhancement of
small businesses by implementing policies or strategies with the motive of providing
funds of start-ups or small businesses at low rate of interest. Such organization plays a
critical role in economic development of nation. Reason is that expansion of small
enterprises leads to improvement in employment opportunities, revenue generation
capacity, tax earning etc. for nation (Vander Bauwhede, De Meyere and Van
Cauwenberge, 2015).
 International trade management: Expansion of business networks is boosted
drastically by government by managing and expanding international trade. In relevance to
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United Kingdom, globalisation is highly supported by its government and focused is
concentrated highly on management of positive trade relations. It provides opportunity to
organizations for expansion of its business activities globally and provides platform for
attracting large number of customers.
CONCLUSION
Above report concludes that business economics serves as a integral part of economics
which focuses on economic concept extension and implementation in context to its influence on
business situations. In this report it is interpreted that low economic growth rate is a major issue
associated with United Kingdom. For the purpose of eliminating this issue various measures can
be taken by government of country. Lastly, this report states that government plays a vital role in
advancing success of business.
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REFERENCES
Books and journals:
Albort-Morant, G. and Ribeiro-Soriano, D., 2016. A bibliometric analysis of international
impact of business incubators. Journal of Business Research. 69(5). pp. 1775-1779.
Ayyagari, M., Demirguc-Kunt, A. and Maksimovic, V., 2014. Who creates jobs in developing
countries?. Small Business Economics. 43(1). pp. 75-99.
Colombelli, A., Paolucci, E. and Ughetto, E., 2019. Hierarchical and relational governance and
the life cycle of entrepreneurial ecosystems. Small Business Economics. 52(2). pp. 505-
521.
Keller, G., 2015. Statistics for Management and Economics, Abbreviated. Cengage Learning.
Parker, M., 2018. Shut down the business school. University of Chicago Press Economics
Books.
Plotnikova, M., Romero, I. and Martínez-Román, J. A., 2016. Process innovation in small
businesses: the self-employed as entrepreneurs. Small Business Economics. 47(4). pp.
939-954.
Vander Bauwhede, H., De Meyere, M. and Van Cauwenberge, P., 2015. Financial reporting
quality and the cost of debt of SMEs. Small Business Economics. 45(1). pp. 149-164.
Online
Economic growth. 2020. [Online]. Available through < https://www.economicshelp.org >
Labours productivity. 2020. [Online]. Available through < https://www.economicshelp.org >
Government debts. 2020. [Online]. Available through < https://www.economicshelp.org >
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