UK Economy Analysis: Key Economic Terms, Systems, and Macro Issues

This report provides a comprehensive analysis of the UK economy, beginning with an introduction to key economic terms, including factors of production, opportunity cost, and supply and demand. It then demonstrates and differentiates various economic systems such as free market, command, and mixed economies, highlighting the UK's adoption of a mixed economy. The report delves into the features of the UK economy, examining the motives of both private and public sectors, the role of fiscal and monetary policies, and the significance of government spending. Furthermore, it identifies and discusses several macroeconomic issues impacting the UK, including unemployment, inflation, and GDP fluctuations, providing insights into their effects on the country's economic landscape. The report concludes by summarizing the key findings and emphasizing the UK's strong economic standing and potential for growth.

ECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1.1 Explaining Economic terms in UK...................................................................................1
1.2 Demonstrating different kinds of economic system.........................................................2
2.1 Analysing features of UK economy.................................................................................3
2.2 Identifying various macroeconomic issues in UK economy............................................4
CONCLUSION................................................................................................................................5
BIBLIOGRAPHY............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Internal environment of the UK describes that the country has the sound economy which
makes it different from various other nations. Hence, this country has developed itself in various
fields such as in technology, medical, education, trade and commerce as well as it has the stable
currency rates. In the present assessment there will be discussion based on the various key
features and term of the UK's economy as well as the influences of the macroeconomic factors in
the country. The report will also highlight the main issues has been faced by the nation in its free
market economy in the upcoming years.
1.1 Explaining Economic terms in UK
By considering the various key elements in the business there is need to make proper
analysis of the various terms like Four factors of production such as:
Land: In terms of manufacturing a unit there is need to decide the place or location
where the business plant can be installed and operated. Hence, there can be requirements of the
property which will be for the purpose of production, office purposes and for relevant business
purposes.
Labour: In accordance with production or making the manufacture of the units or goods
there will be requirements of workforce in making the adequate efforts or performances which in
turn helps the organisation to achieve the business targets. Hence, with the help of recruiting the
employees for the particular jobs or tasks which can be result in generating the good employment
opportunities for UK.
Capital: In consideration with making the operational activities very effective there will
be need of adequate or appropriate amount of funds which in turn helpful for organisation ins
making the adequate amount if investment of utilise such funds for making expansion as well as
performing the tasks of business (Mertens and Beblo, 2016). Hence, in order to have better
investment various governmental agencies or institutions are helping the industries by granting
them the adequate amount of funds.
Entrepreneur: There is need to adequate guidance and a leader who will creates
business vision or mission on which the whole workforce will make the adequate performances.
Hence, it can be said that, with the help of a proper guidance the entrepreneurs will be able to
make the appropriate decisions.
1

Opportunity cost: These are the alternative costs which helps the individual in deciding
in making the investment in the two variables or the two pieces of operations. Hence, the cost
assumes that the best choice of the costs has been made by the individual and the profitable
project to be chosen which in turn helps the in gaining the adequate returns in coming time
(Hennes and et.al., 2016). Thus, it can be said that with the help of such cost techniques which
will be beneficial in making the choice between scarcity and preferences.
Demand and supply: These are the prime terms which are need to be understand by the
individual such as demand generated by business over its products and services. Hence, it can be
said that, business is need to make the adequate supply of such products. Thus, this in turn helps
the firm in analysing the adequate demands in the market for the products or services offered by
firm as well as the managers of the business could be able to manufacture the products in
accordance with the products.
1.2 Demonstrating different kinds of economic system
Free market economy: In these kinds of economic systems there has been no restriction
or barriers over the operational activities such as buying and selling, as well as over production
of any unit (Tong and Tao, 2016). Hence, it can be said that, people are free to make the entry or
exits from the market and produce the products which will not have any restriction in producing
the articles.
Command economy: By considering these kinds of economic policies which in turn
reflect the rules that there can be influence of the central government as well as make effective
economic decisions. Hence, these kinds of economic systems will help the government in
controlling all the monetary or non monetary transaction in the county (Mirakhor, 2016). Hence,
in UK HMRC and the legal authority as well as central government make rules and regulations
as well as execute the operational transactions in the country which are relevant with the
taxation, imports or exports as well as rates over products or services.
Mixed economy: These are the economic systems which in turn helpful for the nation or
the citizens in the context with that there is semi-government influence and semi-privatisation.
Hence, such economy systems have been adopted by various nations such as India, UK etc.
which in turn beneficial in gathering adequate amount of funds to the trade and commerce as
well as the adequate sources of funds will be available for the government in context with
charging taxes (Ali Nasir and et.al., 2016). Hence, it will be fruitful for the nation that
2

Government can easily make changes in the taxation policies as well as gather the adequate
amount of funds.
Levels of government spending: The government of UK makes spending in the various
terms such as Debt security, capital expenditures as well as operating expenses (Role of
Government in Economic Systems, 2017). Hence, the GDP can be managed by the government
which in turn facilitate the transfer of funds and make policies or procedures which in turn affect
the better optimal level of government expenditures.
2.1 Analysing features of UK economy
Motive of private sector:
To analyse the UK's economic environment the country is having the sound economy
which denotes that the country is developed as well as have the good economic standard which
makes it able to spent the such reserve in infrastructural developmental. Hence, it can be said that
the policies and regulations implemented by the government in context with making the adequate
development which will be helpful for the citizens in having adequate employment opportunities
as well as their will be raise in the living standard of them (Wolf ed., 2016).
Motive for public sectors:
By considering these kinds of expenses which are relevant with the investments, receipts,
debts and borrowings of the periodical basis. Hence it will be helpful in raising the public
sources of finance as well as helps the economy in motivating or expansion of the small sector
enterprise (Dharmasena, Bessler and Todd, 2016). Hence, with the help of such tools various
SBE will have good platform on which they can expand their business operations.
However, In consideration with the agricultural environment of the country which
reflects that the country will be able to make revenue gathering from such source. Hence, it can
be said that more than 60% of the food need has been covers by the nations through its
agriculture with less than 1.6% of the laborious efforts (Turner, Gale and Gradstein, 2016).
Hence, it can be said that 0.6% of the revenue in the governmental funds has been generated
through this sector. On the basis of UK's infrastructural development the country has wide
numbers of transportation facilities, roads, electricity services, various big universities, schools,
colleges and medical facilities.
3

Fiscal policy: these policies benefited the UK government in making the adequate
budgets for the revenue or expenditure incurred in the economy (Mertens and Beblo, 2016).
Hence, the main motive of such policy is that they make the adequate decisions which in turn
helps in reducing the unemployment tax rates and the interest rates over any investments or
loans. The taxes levied over the product, services as well as income generated by a person or
corporation will be collected under consideration of HMRC, Central or local government
(Dhingra and et.al., 2016). Thus, the taxation policy of the government in UK is sound and
adequate as the country will gather the large amount of revenue or income through such sources.
Thus, it can be said that, it helps in making improvement in the business, individual earning as
well as raise the economic standard of the citizens.
Monetary policy: In accordance with managing the currency rates which in turn helpful
for government in making the adequate monetary policies. Hence, it helps in deciding the prices
of the commodities as well as helps in fixing the bank rates. Thus, such changes will help SBE in
making investment in big financial dealings.
2.2 Identifying various macroeconomic issues in UK economy
UK's economy can be influenced by various macroeconomic factors such as:
Unemployment: Due to raise in the Imports or influence of various foreign business in
the economy which has affected the employment opportunities in the country. Hence, UK has
influence of various culture and society such as there are many religious group who has owned
the citizenship in the country. Thus, these factors influence the local business as well as GDP
growth of the nation. Hence, such things affect the total employments opportunities in the
country (Hennes and et.al., 2016).
Inflation: This factors influences the various corporation groups in the country. Hence, it
affects in raising in the prices of various necessary commodities such as Petroleum products,
food and service as well as transportation facilities. Hence, with the influence of such factors the
people start to save their money as well as reduced the expenditures (Tong and Tao, 2016). Thus,
such situation affects the revenue gathering of nation and they will be able to make any further
investment. It is the state on which the bull in the prices of the commodity has been seen by the
government such as raise in the prices of petroleum product, food article, educational fees,
taxation and transportation (Turner, Gale and Gradstein, 2016). Hence, such techniques will be
4

beneficial for the government in acquiring adequate amount of revenue gathering but the
pressure has to be suffered by citizens of population in the country.
GDP: The economy of UK can be influenced or balance by its internal economic stability
which in turn reflects the ability of the Country in manufacturing the most of the products and
service within the nation (Dhingra and et.al., 2016). Hence, it can be said that if a nation focuses
more over producing the goods within the national boundaries which in turn will be beneficial in
terms of facilitating the employment opportunities as well as raise the economic capital of
nation.
CONCLUSION
In accordance with the report, it can be said that UK has the strong or sound economy as
well as have the adequate growth in its employments, agricultural facilities, educational sector,
trade and finance as well as in health and security. There has been study made of various key
elements of the economic systems which were adopted by different nations and their comparison
with the UK's economy. Further it can be said that, with the help of adequate policies and
procedures the country will be able to make the huge investments in context with developing the
nation.
5

BIBLIOGRAPHY
https://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook.html
https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-2-factors-of-
production
http://smallbusiness.chron.com/economic-definition-four-factors-production-3941.html
http://www.investinganswers.com/financial-dictionary/stock-market/opportunity-cost-2560
https://corporatefinanceinstitute.com/resources/knowledge/economics/what-is-command-
economy/
http://www.economicsdiscussion.net/economy/mixed-economy-meaning-features-and-types-of-
mixed-economy/2064
https://krugman.blogs.nytimes.com/2012/06/03/the-level-of-government-spending/
https://www.ft.com/content/d6660544-6860-11e6-a0b1-d87a9fea034f
http://www.bankofengland.co.uk/monetarypolicy/Pages/default.aspx
https://ig.ft.com/sites/numbers/economies/uk
https://www.britannica.com/topic/supply-and-demand
6

REFERENCES
Books and Journals
Ali Nasir, M. and et.al., 2016. Macroeconomic policy interaction: State dependency and
implications for financial stability in UK: A systemic review. Cogent Business &
Management. 3(1). p.1154283.
Dharmasena, S., Bessler, D. A. and Todd, J., 2016, May. Socioeconomic, Demographic and
Geographic Factors Affecting Household Food Purchase and Acquisition Decisions in the
United States as a Complex Economic System. In Presentation at the 2016 Agricultural &
Applied Economics Association Annual Meeting (Vol. 31).
Dhingra, S. and et.al., 2016. The question is not whether Brexit will cost the UK in economic
terms but how much. British Politics and Policy at LSE.
Hennes, E. P. and et.al., 2016. Motivated recall in the service of the economic system: The case
of anthropogenic climate change. Journal of Experimental Psychology: General. 145(6).
p.755.
Mertens, A. and Beblo, M., 2016. Self-reported satisfaction and the economic crisis of 2007–
2010: Or how people in the UK and Germany perceive a severe cyclical downturn. Social
Indicators Research. 125(2). pp.537-565.
Mirakhor, A., 2016. Seyed Kazem Sadr, The Economic System of the Early Islamic Period:
Institutions and Policies. Journal of Economic and Social Thought. 3(3). pp.458-466.
Tong, X. and Tao, D., 2016. The rise and fall of a “waste city” in the construction of an “urban
circular economic system”: The changing landscape of waste in Beijing. Resources,
Conservation and Recycling. 107. pp.10-17.
Turner, H., Gale, A. and Gradstein, F., 2016, April. The Kimmeridge Clay Formation (Upper
Jurassic-Lower Cretaceous) of the Norwegian continental shelf and Dorset, UK: a
chemostratigraphical correlation. In EGU General Assembly Conference Abstracts (Vol. 18,
p. 14943).
Wolf, H. ed., 2016. Contemporary Economic Issues: Macroeconomics and Finance. Springer.
Online
7

Role of Government in Economic Systems. 2017. [Online]. [Available through]
:<http://www.economicsdiscussion.net/government/role-of-government-in-economic-
systems/4041>.
8