Business Economics: UK Economic Growth Challenges and Government Role

This report delves into the intricacies of business economics, focusing on the UK's economic growth and development. It explores key economic factors affecting businesses, including market demand, supply, and government policies. The report provides an overview of the UK's economic background, highlighting its strong financial sector and international trade. It identifies major economic problems such as weak growth, low productivity, and rising government debt. The report also examines the government's role in fostering business success through various support mechanisms, including infrastructure development, trade relations, financial schemes, and technological advancements. The analysis concludes with the importance of government support and economic planning for sustainable business growth and overall economic advancement.

Economics
For
Business

EXECUTIVE SUMMARY
This report is based on the business economics which refers to economic factors which
affects businesses by market demand and supply. Economic growth refers to advancement in
infrastructure, education level, finance sector, technology, trade relations etc. government plays
vital role in advancement of business success by providing various services to the businesses.
Government spendings for businesses by giving mortgage free loans, infrastructure, trade
relations which helps firms for expanding its services.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Background of UK economy and its economic growth or development:....................................4
Details of economic growth problem:..........................................................................................5
Role of government plays in advancement of business success in the country:........................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Economics is refer to social concern with the production, distribution and consumption of
goods and services which is required in the country for fulfilling customers needs with scarce of
resources. It is the study of how to individuals, governments make choices for how to allocate
resources. Business economics field apply in economics for using of economic theory and
quantitative methods in order to analyse the performance of the business. It is about society is
using scarce of resources in order to produce business goods and service. Business economics
provides an arena of demand and supply in the business which is the main element of any
business and country's profitability. This report is based on UK country and the title which is
selected for this report is economic growth or economic development. This report covers topics
such as background of UK and its economic growth, economic problem, charts and methodology
for identifying economic problem. Apart from this it also covers topics such as Government role
in advancement of business success.
MAIN BODY
Background of UK economy and its economic growth or development:
Background of UK: From the UK economy, it is known as largest market in the overall
world for the purpose of fund management with two largest countries US and japan. The assets
of UK has overall record of $ 11.8trn in year 2017 and the strong sector which UK involves in
its economy is international orientation as it trades in international market in wide level. UK
plays vital role for the specialists areas in financial services such as banking. It is the most
innovative, sophisticated and dynamic country centred in finance. From the data of UK, over
50000 employees are working in financial sectors and its related services. Its fund management
sector contributed 0.8% of its GDP in year 2007. In addition, It is most of the larger centres in
investment in private wealth (Boudreaux, 2020). It has large financial market, higher number of
businesses are attached with it. It shows the second largest deposits in the banking across the
world after than US economy. Around 20% of the global total its economy covers and banking
sector traditionally gives higher rate of return on UK capital for its economic growth rather than
other developed and advance economies. It also has largest role in private and investment
banking. It has home of more foreign banks rather than other largest economy. Its city London
has branches and subsidiaries of 254 foreign banks which is almost double of New york.

Economic development refers to advancement in countries related to finance, education,
business, infrastructure, government etc. it is about increase in production which is related to
economic goods and services. It discovers the business cycle in the economy. In context to UK,
economic development is related to growth in its finance sector, GDP, infrastructure. UK has
largest economy which is advance baking sector and other financial institutions (Bourlès and
Cozarenco, 2018). UK GDP increased by 0.4% in the Oct. 2020 while it seen 7.9% lower than
Feb. 2020.
Details of economic growth problem:
One of the main problem which UK faces at this time is weak economic growth. With the
output below its trend rate of growth. The decrease in output is the reason of low productivity
growth and its weak demand. Economic growth for the year 2019 is less than 1%. The reasons
for decrease in economic growth is fall in real wages which can be reason for lower living
standards (Cumming and Hornuf, 2018). The government debts ratio also increases, it becomes
more typical for government for reducing its burden of dents to GDP (Economic growth

problem, 2020). Debt to GDP ratio is analysis as keep rising.
Illustration 1: Economic growth problem, 2020
(Source: Economic growth problem, 2020)
Lower productivity has falling countries trends and growth rate. part of low growth may
be reason of lower wages to employees which can become issue of fall in employment. If this
trend is continues it will be reason for living standards and tax receipts (Economic growth
problem, 2020). This will creates limits for government in terms of healthcare and public
services spendings.


Illustration 2: Labour productivity, 2020
(Source: Labour productivity, 2020)
 Government debts have increased by under 40% of GDP to over 82% of GDP. In past
decades tax revenues has been falling and it is typical to increase tax rates by government
(Government debts, 2020). Government spendings is arising for public healthcare and
pensions while tax revenues was going down. This is the reason for lower economic
growth because government has spends on public over their pensions while it decreases
its revenues by receiving lower taxes (Dominko, and Verbič, 2019). The decrease in tax
is the reason for fall in employment. The rise in debts can impact on political and
becomes limits on willingness of future government spending on UK's infrastructure
which is needed for investment for better transport.

Illustration 3: Government debts, 2020
(Source: Government debts, 2020)
In order to maintaining better economy the investment in agriculture, industry sector,
social economic infrastructure, education etc. is necessary. The government is spendings large
amount for the energy, power, transport, communications, health, education etc. The reason for
low development in economy is less concentration on infrastructure, GDP, taxes, trade relations,
employment etc (Hassan and Basit, 2018). it can be reason for less development in economy.
economic development is related to growth in its finance sector, GDP, infrastructure. UK has
largest economy which is advance baking sector and other financial institutions.
Role of government plays in advancement of business success in the country:
Government plays vital role in advancement of any business success as it provides
support to businesses in different ways. It supports businesses for providing productive

employees, some financial schemes, mortgage free loans, educational professionals, trade
relations etc. as various businesses affects by government policies, its forces businesses in order
to runs its activities in better way (Hassan and Basit, 2018). Government provide trade relations
to businesses as they can expand their business worldwide and it helps them in order to create
brand image. The government takes steps towards in order to protect customers, in this
customers has rights to go for law. It provides subsidies to businesses and spendings to
customers so that they can spend in their basic needs and contribute towards economy. If
government policies will change it affects businesses. Various government banks provides loans
to businesses at lower interest rates, agriculture policies , tax rates support etc. the role of UK
government for supporting businesses are mentioned below (Lin and Wang, 2019):
 Government supports businesses in order to provides new IT technologies so that they
can produce goods and services by new technologies and it makes their works easy. They
can provide innovative and can increase new product line for more efficiency as it
provides digital support (Maliranta and Nurmi, 2019).
 Government helps in expand business networks by growing businesses in international
level. In context to UK, the government of UK using various elements for expanding
business networking. It allows globalisation so that they can trade with international
which helps them in order to increase their brand value and attract investors for investing
in business. These things helps in expanding business which leads to increase in
profitability. As UK has trade relation with US and Japan (Parker, 2018).
 MSME support: This sector plays vital role in any economy development. In this context,
government supports these types of businesses in various ways by providing various
services to them includes mortgage free loans, lower tax rates so that they can increase
their profitability (Peleckis, 2016).
CONCLUSION
From the above report it has been concluded that business economics is the study of how
to individuals, governments make choices for how to allocate resources. Economics is provides
consumers for spendings in business and life cycle of businesses. Economic growth refers to
development in various factors such as education, businesses, infrastructure, inflation,
employment etc. businesses supports them for increasing income level so that they can provides
supports to economy. In decrease in economic growth there are various reasons includes, lower

infrastructure, unemployment, education level,. Increase in government debts and decrease in tax
income also affects the economy of the country. Lower income level can affects the spendings of
employees and living lifestyle also it leads to decrease in employment. In order to advancement
in business success government plays vital as government provides better infrastructure, trade
relations, finance, mortgage free loans, digital advancement etc.

REFERENCES
Books and journals:
Boudreaux, C. J., 2020. Ethnic diversity and small business venturing. Small Business
Economics. 54(1). pp.25-41.
Bourlès, R. and Cozarenco, A., 2018. Entrepreneurial motivation and business performance:
evidence from a French microfinance institution. Small Business Economics. 51(4).
pp.943-963.
Cumming, D. and Hornuf, L., 2018. The Economics of Crowdfunding (pp. 1-279). London, UK:
Palgrave Macmillan.
Dominko, M. and Verbič, M., 2019. The economics of subjective well-being: A bibliometric
analysis. Journal of Happiness Studies. 20(6). pp.1973-1994.
Hassan, Z. and Basit, A., 2018. Ease of doing business and its impact on inward FDI. Hossain,
MT, Hassan, Z., Shafiq, S., & Basit, A.(2018). Ease of Doing Business and Its Impact on
Inward FDI. Indonesian Journal of Management and Business Economics. 1(1). pp.52-
65.
Hassan, Z. and Basit, A., 2018. Ease of doing business and its impact on inward FDI. Hossain,
MT, Hassan, Z., Shafiq, S., & Basit, A.(2018). Ease of Doing Business and Its Impact on
Inward FDI. Indonesian Journal of Management and Business Economics. 1(1). pp.52-
65.
Lin, S. and Wang, S., 2019. How does the age of serial entrepreneurs influence their re-venture
speed after a business failure?. Small Business Economics. 52(3). pp.651-666.
Maliranta, M. and Nurmi, S., 2019. Business owners, employees, and firm performance. Small
Business Economics. 52(1). pp.111-129.
Parker, M., 2018. Shut down the business school. University of Chicago Press Economics Books.
Peleckis, K., 2016. International business negotiation strategies based on bargaining power
assessment: the case of attracting investments. Journal of business economics and
management. 17(6). pp.882-900.
Online
Economic growth problem. 2020. [Online]. Available through < https://www.economicshelp.org
>
Labour productivity. 2020. [Online]. Available through < https://www.economicshelp.org >
Government debts. 2020. [Online]. Available through < https://www.economicshelp.org >