United Kingdom Economic Growth and Tourism: A Report on Islington

Desklib provides past papers and solved assignments for students. This report analyzes the UK economy and tourism.

ASSIGNMENT 1
1

TABLE OF CONTENTS
Introduction......................................................................................................................................3
a) Developed economy................................................................................................................3
b) Government influence.............................................................................................................4
c) Tourism development..............................................................................................................7
d) Local impacts and business development...............................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
2

LIST OF FIGURES
Figure 1: Gross domestic product (GDP) year on year growth in the United Kingdom (UK) from
2000 to 2017....................................................................................................................................5
Figure 2: United Kingdom Gross External Debt.............................................................................7
3

Introduction
In the modern era, tourism and hospitality industry has emerged as one of the fastest growing
and potential industries in the world. Furthermore, the industry is contributing a lot in the growth
and development of economies within the developed, developing and under-developed nations
(Ryan-Collins et al. 2016). The current study is based on UK which is one of the most developed
countries of the world and the country is also considered as the fifth largest economy in the
world in terms of GDP. The historical economic trends and future growth forecast of UK has
been highlighted in the present study. In addition to this, the government influence on economy
of UK has also been explained in the report.
a) Developed economy
It can be expressed that UK has been selected as the developed country for this study and the
rationale behind selecting UK as a country is that it has the most vibrant economy in the entire
world. Furthermore, the economy of the selected nation is also considered as market-oriented
and as a highly developed economy (Assa, 2016). This can be termed as another major reason
behind selecting UK as a country for analysis. In terms of purchasing power, UK economy is
ninth largest in the world whereas in context of GDP growth, the economy of selected nation is
fifth largest in the world. It has also been identified that back in the year 2016; the country was
ranked at the fifth largest exporter of goods and tenth largest exporter of the same.
Over the past few years, the service sector of the selected developed nation is dominating the
entire GDP by contributing approximately 80% of the total or overall GDP. Apart from this, the
high-income economy of the country also outlines the fact that at present UK is a developed
nation. The mentioned below chart outlines the historical economic trends of the country:
4

Figure 1: Gross domestic product (GDP) year on year growth in the United Kingdom (UK)
from 2000 to 2017
(Source: Statista, 2018)
The mentioned above chart outlines the fact that back in the year 2008 and 2009, UK economy
was very weak because of the global recession and in 2009, the growth rate of UK economy was
-4.2%. However, it can be critically argued that after the end of 2009, the economy has grown
and improved in a significant manner until 2014.
After 2014, the GDP growth of the selected nation is constantly declining. It is expected in future
or in 2019, the GDP growth will be around 1.6% and this means that there will be a slight growth
in the economy (PWC, UK, 2018). Furthermore, short term cuts in taxes and increasing spending
of government are going to be the two major factors which will be boosting up the economy of
UK. Apart from this, the competitive value of pond and strong growth of the global economy are
some other factors which will be contributing to the growth of the UK economy in future.
5

b) Government influence
In October 2018, the GDP of UK has grown by 0.4%, and the annual growth rate of the economy
was modest to 1.3%. The influence of government in the overall economic development and
growth of the UK economy is very high. It can also be expressed that at present, the government
of UK is playing or working as an agent for development and growth of the economy (Bolt et.
al., 2018). The statement can be justified by the fact that at present, the government of UK is
actively involved in regulation and maintenance of the social and legal framework which further
contributes in the overall development and growth of economies.
It has been identified that the government of UK is also influencing the economic growth by
providing policies linked with control and regulations of the market. During the period of 2008-
2009, the government has developed and implemented effective policies to support economic
growth and deal with the global recession (Geary and Stark, 2015). The government of UK is
also influencing the country’s economic growth through tools such as monetary policies, tax
rates and fiscal policies. Over the last two years, the government has influenced the economy in a
positive sense by keeping the interest rates low to 0.50% to 0.75%. However, it can be argued
that in 2017 and 2016, the interest rates were very, i.e. 0.25% (UK Interest rate history and
graphs, 2018).
Back in the year 2008, the interest rates in the country were 5%, and the global recession was the
major factor which has resulted in increasing the rates. It can be expressed that the role of
interest rates is very critical in the overall growth and development of a nation’s economy. The
statement can be justified by the fact that low rates of interest result in providing the citizens
with an opportunity to spend more money. On the other hand, in situations when the interest
rates are very high, individuals are required to pay high interest and this further result in reducing
the spending or purchasing power of individuals (Davis and Walsh, 2016).
The government of UK is influencing the economy and GDP growth of the country positively by
maintaining low-interest rates, and businesses and consumers in the UK are getting direct
benefits from the same.
British Pound is the currency of UK, and at present, the currency is valued at 1 Pound sterling is
equals to 1.29 USD. It has also been identified that Pound sterling is one of the oldest currencies
existing in today’s world. The value of UK currency is growing at a satisfactory rate and UK’s
services, and manufacturing sector is contributing a lot to the overall growth of its currency. The
6

influence of government here is also critical as the government is carrying out close supervision
of pound banknotes.
In the second quarter of 2018, the external debt of the United Kingdom was recorded as 6382913
GBP Million and the debt reduced to 6301189 GBP Million in the third quarter of 2018. From
the period 1987 to 2018, the average external or foreign debt of the country has been recorded as
3368060.99 GBP Million. The value of external debts is satisfactory, and this indicates the fact
that the UK government has always focused on maintaining low debt by implementing various
plans and policies. On the other side of this, the highest value of external or foreign debt was
recorded as 6428718 GBP Million, and this was in the second quarter of 2011. The below-
mentioned chart outlines the gross external debt of the United Kingdom in the past few years:
Figure 2: United Kingdom Gross External Debt
(Source: Trading economics, 2018)
At present, the government of UK has been able to maintain a satisfactory economic
environment within the country. Furthermore, in the year 2018, the UK economy has attained a
steady growth, and this growth has directly supported in the businesses and consumers in the
country. However, it can be critically argued that the politics over an issue such as Brexit has
resulted in restricting the overall economic growth of the country to a great extent (Miller et al.
2016). The weak value of the pound has resulted in increasing the exports within the nation
7

whereas the low credit or rate of interest has resulted in providing adequate benefits to the
customers or consumers in the UK.
The government has not been able to develop and implement effective policies and plans which
can assist the UK in pacing up with its biggest economic rivals in the country. On the other side
of this, it can be argued that the increased wages will accelerate economic growth of UK by
boosting up private consumption in the best possible manner. After carrying out the analysis of
UK’s existing economic environment, it can be expressed that the country’s GDP will grow by
1.5% in the year 2019. In 2014, the GDP of UK was valued that 3027 USD Billion whereas at
the end of the year 2017, the value of UK’s GDP was 2626 USD Billion (UK economic forecast,
2018). In 2014, the annual economic growth was recorded as 3.1% whereas, in 2017, 1.8%
recorded as GDP growth rate.
In the context of personal well -being of UK citizens, it has been identified that a small yet year
on year improvement has been recorded in the satisfactory rating of the average life of people in
the country. Furthermore, in 2017, the country has attained the highest level of satisfaction and
happiness ratings since the year 2011. More than 70%, i.e. 7.7 people out of 10 were satisfied
with their , and therefore, it has been witnessed that there is a drastic change in the personal well
-being of citizens within the UK between the period ranging from 2011 to 2017 (Personal well -
being In UK, 2017).
8

c) Tourism development
The role of UK government is critical in boosting up and carrying out the development of
tourism and hospitality industry of the country. For instance, adequate plans and policies can be
developed and implemented by UK’s government so boost up the entire hospitality and tourism
industry. In addition to this, development of infrastructure is also an important step which can be
taken into consideration by UK’s government with an objective to enhance and facilitate the
growth of hospitality and tourism industry (Pratt et al. 2015).
It can be expressed that the government of UK can emphasize developing and improving the
infrastructure so that the travel can become easy and more convenient. The infrastructure
development is also considered as a critical strategy because it will help in improving public
transport and facilities within the country. The result of this is that more and more travelers and
tourists from different countries of the world will be encouraged or motivated to visit the country
(Salemdeeb et. al., 2016). The UK government can also emphasize areas such as implementing
new and advanced technology within the industry. The rationale behind this is that investment in
technology will result in making the booking of rail and road easy and effective for the travellers
and tourists visiting the country. It has also been identified that at present the hospitality and
tourism sector of UK is struggling with issues such as the seasonal nature of the industry.
To deal with this issue, the government of UK can play a critical role by introducing flexible
apprenticeship program. Education and training in the form of apprenticeship programs are
considered as a useful strategy because the programs will directly contribute in attracting more
and more individuals to develop their career in the industry (Evans, 2016). The result of this is
that overall degree of customer satisfaction and quality of services will be improved. The
restructuring of areas such as Visit England and Visit Britain are some other corrective measures
which can be used by the government of UK to boost up and facilitate higher growth of the
tourism and hospitality industry of the country.
On the other side of this, it can be critically argued that one of the most important steps which
the government of UK can take to create positive environment and to carry out development of
the hospitality and tourism industry is linked with carrying out continuous improvement in the
services linked with Visa and making the process easy and satisfactory.
9

The result of this is that smooth and satisfactory Visa processing systems and procedures will
directly contribute to attracting more and more travellers and tourists within the country
(Broberg et al. 2015). Economic incentives in the form of low-interest rates, taxes and easy loans
can also be offered by the government of the country to create a positive environment. Low taxes
and interest rates will encourage more and more people in the UK to get associated with the
tourism and hospitality industry, and this will further result in improving the overall quality of
services and products delivered to the travellers and tourists.
Marketing is also a good initiative which can be taken into consideration by UK government to
develop a positive environment and boost up the travel and tourism industry. The government
can focus on developing and implementing effective marketing plans and strategies to promote
tourism and travel. Here, traditional marketing channels can be used to attract local or domestic
travellers, and digital marketing channels and platforms can be used to attract international
tourists and travellers (Pollard, 2018).
It can also be stated that effective marketing strategies and plans of the government will help in
creating the demand for services and products offered by UK tourism and hospitality industry in
the international markets. Other measures such as encouraging corporate sponsorship programs
for different attractions and heritage buildings can also be taken into consideration by UK
government to boost up the travel and hospitality industry.
On the other side of this, development of the passenger terminals, establishing the first aid
centres and improving amenities associated with wayside are some other measures which can be
employed by UK’s government to create a positive environment (Hodgson, 2017). The role of
government is very critical for the development of the entire industry, and therefore, it is
suggested that adequate support and assistance should be provided by the government to all
businesses in the industry. Creating new jobs and opportunities for employment is termed as
another useful way which can be employed by the government to carry out the development of
the industry.
10

d) Local impacts and business development
Islington, London has been selected as the city or location for starting tourism or hospitality
business within the same. The chosen location is considered as a deprived area in London, and it
is also popular for attracting the least number of tourists. Lack of pleasant architecture and
satisfactory infrastructure can be termed as the two major reasons because of which the domestic
and international travellers and tourists are less interested in visiting Islington (Medlik, 2016).
Apart from this, high rate of child poverty in the location selected is also considered as a critical
reason because of which the destination has failed to attract the desired number of travellers and
tourists in the long-run. The crime rate in Islington is also very high, and this has resulted in
creating a high degree of threat among the local residents and tourists. Poor natural environment,
health and housing facilities are also considered as some critical reasons because of which
Islington has been termed as a less attracting destination.
Here, a resort with all facilities can be termed as the type of business which will be more suitable
for the location. The resort will help in attracting more and more tourists by offering satisfactory
services linked with food, accommodation and leisure to the tourists and travellers. The process
of business development will consist of four major stages which are the selection of location,
procurement of resources, developing the resort and marketing and promotion of the same (Raj
and Griffin, 2015). The objective of business will be to offer world class and the best possible
services to the guest and tourists. To attract local finance for the project, engagement of the
people and small businesses within Islington will be taken into consideration.
The business will clearly communicate the fact that it will not only focus on generating higher
profits and it will also emphasize a lot in areas such as community growth and development. The
business will also look forward to spending a considerable amount of resources in developing
health, housing and infrastructure facilities within Islington (Boniface, 2017).
The views and opinions of people living in nearby areas will be encouraged and considered
during all stages of business development. However, it can be critically argued that development
of business in Islington for tourism and hospitality will not be an easy task and there are wide
ranges of issues linked with legislation and planning which will be faced. For example, during
the process of planning, issues such as protest from the local people and authorities will be faced.
At the same time, following the local laws and legislation during the process of development is
11

also going to be a key issue which needs to be taken care of in the best and every possible
manner (Crick et. al., 2018).
In the context of staffing, it can be expressed that local residents will be hired for the business
and the objective behind providing preference to the local people living in Islington is that the
employment opportunities will help them to fight or deal with a social issue such as poverty. In
addition to this, training and development programs will be conducted to develop skills set and
knowledge among employees so that they can deliver fast, effective and satisfactory services to
the customers (Sharples and Marcon-Clarke, 2019).
In terms of economic effects, it can be asserted that the business will be providing wide ranges of
economic benefits to Islington. For instance, it will create employment opportunities for the local
people, and at the same time, it will be contributing a lot to the infrastructure development of the
destination. The standard of living and income level of the local residents will increase because
of the business as it will be attracting travellers and tourists from different locations of the world.
The increasing popularity of Islington as a tourist destination is also a major advantage
associated with the business.
On the other side of this, it can be argued that there will be certain negative impacts of the
business or resorts on the local people and communities within Islington.
For example, during the stages of development and construction of the resort, the high amount of
pollution will be generated, and the lives of local people will be affected because of the same. In
addition to this, the construction stage will be a threat to the natural environment of Islington
(Agarwa et. al., 2018). However, the business will be using sustainable practices and strategies to
make sure that its activities and operations will not create any kind of negative impact on the
environment and local communities.
12