Business Environment: UK Economy Analysis and its Impact

This report provides an analysis of the UK economy, examining key economic indicators like GDP growth and employment rates. It explores the influence of fiscal and monetary policies on businesses, including the impact of interest rates and government spending. The report also delves into the role of international trade, highlighting its significance for companies like Asda and the NHS, and the implications of globalization and industrialization. It discusses both the positive and negative effects of international trade on local businesses, such as opportunities for expansion and potential income inequalities. The report utilizes various sources of data, including articles and official websites, to provide a comprehensive overview of the UK's economic landscape and its impact on the business environment.

Business Environment

2.2 UK's economy
 The Gross Domestic Product of the country has witnessed an
increase of 0.6% in the past year that is 2016.
 Amongst the G7 economies, UK is the fastest growing country.
 It has been forecasted that the country shall experience 1.7%
increase in GDP by 2018.
 Employment rate of the country is 75% which is commendable.

Factors impacting UK's economy
 The continuous monitoring and supervision over countries
businesses by EU has limited progress and development.
 Inflation is also a key concern which impacts country's
economy negatively.
 Changes in regulatory and tax environment are considered as
retarding agents for UK businesses.

Sources of data used
The different sources of data that are used for understanding
current situation of UK's economy are:
 Magazine articles
 Newspapers
 Online articles
 Official or government website

Fiscal Policy and its impact
 Fiscal policy is helpful in deciding the taxes and revenues
government shall generate after deciding budgets and
allocation of resources.
 Asda and NHS can be adversely affected if this policy is not
in favour of the organisation.
 When government runs deficit of capital, increase in taxes
will happen which implies high payment of revenue.

Monetary Policy and its impact
 Monetary policy is a medium or process through which Bank
of England will monitor and control the supply of currency in
the country.
 Interest rate is the prime component whose fluctuations will
affect business organisations.
 Asda has to pay more interests over loans and import duties.
 NHS has to gather funds for facilitating its equipments and
high end machineries which are sometimes acquired on loans.

International Trade
 When business functioning that is exchange of goods, capital
and services is extended from national borders to cross
country interference then the process is international trade.
 Globalisation and industrialisation are the main causes of
international trade
 The companies that are a part of this process are considered
as multinationals.

Significance of International trade for Asda
 The significance or importance of international trade is
understood from the following facts:
 Exchange of goods and capital brings in diversity and
variations in business functioning which leads to innovation.
 Business expansion helps in contributing more to the
economic development of the company.
 Asda can witness its company name transform into brand
name when international trade is successfully implemented.

Positive and Negative Impact on local
businesses
Positive impact:
 Local business gets a fair chance of expanding its roots to
other countries and earn more profits.
 International trade helps in strengthening foreign bonds with
trading countries so that help can be gained whenever
required.

Negative impact
 Income inequalities is experienced when international trade
becomes dominant.
 Policies that are formed by foreign countries to safeguard
their local and ethnic businesses become harmful for local
businesses that are trying to expand.

References
Books and Journals
 Pieterse, J. N., 2015. Globalization and culture: Global mélange.
Rowman & Littlefield.
 Beck, U., 2015. What is globalization?. John Wiley & Sons.
 Leih, S., Linden, G. and Teece, D., 2014. Business model
innovation and organizational design: a dynamic capabilities
perspective.
Online
About Us. 2017. [Online]. Available
Through:<https://www.asdasupplier.com/about-us/corporate-social-
responsibility/sustainability-at-asda>. [Accessed on 22nd February,
2017].