Business Management Report: Fiscal and Monetary Policies in the UK

This report provides a comprehensive analysis of fiscal and monetary policies within the United Kingdom. It begins with an introduction to the business environment and its external forces. The report then delves into the role of fiscal policy, detailing its purposes, objectives, and impact on the UK economy, using examples such as changes in taxation and government expenditure. Following this, the report examines monetary policy, explaining its management of the money supply through mechanisms like interest rates and reserve requirements. It outlines the purposes and roles of monetary policy in the UK, including its influence on inflation, foreign exchange, and interest rates. The report also explores the impact of both fiscal and monetary policies on the economy, touching upon aspects like investment decisions, competitiveness, and the cost of doing business. The conclusion summarizes the importance of these policies in economic development and acknowledges their potential negative impacts. References to academic sources are included to support the analysis.

Business Management

Table of Contents
 Introduction
 Role of fiscal policy using the UK as an example
 Role of monetary policy using the UK as an example
 Impact of both policies on the economy
 Conclusion
 References

INTRODUCTION
Business environment can be simply defined as an arena wherein organisations
run their commercial activities for achieving predetermined aims and
objectives. This environs consists of different external forces which
commonly impacts entire performance of an enterprise. Some of the major
forces are globalisation, corporate social responsibility, technological
improvement etc.

Role of fiscal policy using the UK as an example
Fiscal policy refers to the use of government collected revenues specially from
taxes as well as expenditures in influencing the economic condition of a
nation. When legal bodies change the taxation level and amounts of current
expenditures, then a great impact would be seen at aggregate demand along
with the existed level of economical activities.

Cont...
Purpose and aim of fiscal policy
The major purposes of fiscal system in United Kingdom are listed below :
 Reduction in the current rate of rising prices or inflation.
 Minimisation of budgetary deficiencies and deficits within UK.
 Aim to improve the living condition of common public by increasing the
opportunities of employment.

Cont...
Roles and objectives of fiscal plan of action in UK :
The main roles and objectives of fiscal principles within United Kingdom are
described below:
 Equality in distribution of wealth
 Stabilisation of pricing level
 To achieve economical stableness

Role of monetary policy using the UK as an example
Monetary policy can be depicted as management in respect of the supply of
revenue within national economy. These plans are being maintained by
few activities such as flaring interest rate, making alteration in sum of
money banks as required to keep in reserve and many more.

Cont..

Cont..
As per the graphical presentation, it can be analysed that government may
pursue the fiscal policy. For instance, in the year of 2009 government cut the
rate of VAT which try and stimulate the economic activity in the period of
deep recession.

Working of monetary policy
This scheme can be implemented either for reflation or deflation of economy.
In case of conditions related to declination in economical situation occurs
within particular place, then at that time frame monetary principles are used
for trimming down the interest rates. Thus as a result, people or any
organisation would show curiosity in borrowing more loans.

Cont..
In case of inflation, if committee members working under similar strategical
management think that level of inflation is touching the height of sky, then
during this period those people consider to enhance the existed interest
rates. This as a fruitful outcome, discourages common citizens as well as
companies from taking loans or borrowing huge amount of revenue.

Purpose of making monetary policy
The main objective and purpose of establishing monetary policy in UK are
mentioned as follows :
 To speed up the economical growth and development of country
 Balance of payments (i.e. BOP) Equilibrium
 To promote full employability and distribute income equally