Macroeconomic Policy and Public Services in the United Kingdom

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UNIT 5: GOVERNMENT DECISION MAKING AND THE
PUBLIC SERVICES
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Table of Contents
Introduction......................................................................................................................................2
Main body........................................................................................................................................3
Conclusion.......................................................................................................................................8
Reference list...................................................................................................................................9
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Introduction
The macroeconomic policy of a country helps to understand the inflation rate, economic growth,
fiscal policy and employment levels of the country so that economic stability of the country can
be examined. In case of public service, UK government has played the important role in order to
make decision for maintaining the discipline of the country. In this study, effect of UK
government policy on the country will be analysed. Principles related to macroeconomic policy
and evaluation of the usage of policy instruments for maintaining economic sustainability will be
discussed in this paper. National, Local and European policy related objectives on UK public
services will be critically evaluated in this paper.
Hence, the thesis statement of the study is to analyse the government’s decision-making in order
to handle the public service of UK.
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Main body
Analyse the main principles of macroeconomic policy
As per the viewpoint of Mankiw (2016), the main principles related to macroeconomic policy are
employment, economic growth, balance of payments, inflation and budget deficit. Economic
growth can be achieved when the government is able to take appropriate decision related to the
activities of the companies. In order to measure the economic growth, the GDP rate can be
examined and its growth helps to understand that economic status of UK is stable. For example,
0.5% of growth in UK’s GDP (Gross Domestic Product) is observed and it has proved that
economic status of UK is stable (tradingeconomics.com, 2018). Macroeconomic policy assists to
reduce the uncertain economic risk of the nation by taking appropriate decision.
On the other hand, employment rate is another parameter in order to understand the economic
status of the country. It is responsibility of the government to focus on the number of employed
people so that they can arrange earning ways for the people, who are not employed (Weale et al.,
2015). The unemployment rate of UK in 2019 is around 3.9% and the policy of UK government
is to reduce it by offering jobs to the people in order to develop a sustainable economic status
(tradingeconomics.com, 2019).
Another principle is to measure the inflation rate for reducing uncertain economic risk of UK
and in 2018, inflation rate of UK was around 2.48% (in2013dollars.com, 2019). It indicates that
the availability of products is high along with its demand and as a result, the prices are increased.
Therefore, it can be deduced that as people have sufficient money, they are able to purchase it
and increment of inflation does not leave any impact.
However, as commented by Bozyk (2019), budget deficit highlights the economic loss of
country and it helps to understand that due to wrong decision of government, economic profit of
the country cannot be achieved. In case of UK government, their general deficit was £25.5
billion, which is equal to 1.2% of GDP (ons.gov.uk, 2018). From this situation, though deficit is
observed, in context of country, it cannot be taken as a huge loss and UK government is able to
take economic decision effectively. On the contrary, Nikiforos and Zezza (2017) mentioned that
BOP (Balance of Payment) is another principle related to macroeconomic policy, where the
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country focuses on the payment method and their contribution in taxes of the large companies so
that economic status can be maintained. Therefore, it is evident that UK government is able to
take effective decision for their country and it assists UK to get a position in global market.
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Evaluate, using examples, how government uses policy instruments to achieve a sustainable
economy
In the opinion of Kennedy and Prag (2017), various policy instruments are found out in order to
achieve sustainable economy such as exchange rate, demand management, fiscal monetary and
supply side. Exchange rate of a country is continuously changes as per the market share and
people, who work in the public service section need to be aware of it. As mentioned by Baumol
and Blinder (2015), interest rate of the country is changed as per the exchange rate and the
supply of money. In UK, 1.4% of economic growth is monitored and inflation rate is 2.48% as
exchange rate is constantly changed. For example, the employees, who work in government
banks of UK, try to update interest rate of principle amount according to the exchange rate so
that they can maintain value of the money.
On the other hand, fiscal monetary helps to change the government’s taxation policy, borrowing
and spending policy (Garnaut et al., 2017). It is observed that public service commission (legal
sector) of UK has set a taxation rate as per the income of the people. For example, if people earn
within £11500, they do not need to pay any kind of tax to the government. Apart from that, 20%
of earning should be contributed to the government, whose income is between £11501- £45000
(taxscouts.com, 2018). Thus, by using this policy, UK government tries to develop their fund so
that they can use it in the welfare of the country.
As per the viewpoint of Cowen and Tabarrok (2015), supply side policy has been arranged by
government in order to increase the productivity of the country. The benefits of using this policy
are the decreasing the inflation rate, unemployment rate and improvement in balance of
payments. For example, it is found that UK government contributed huge amount of money in
the education sector so that unemployment rate can be deduced (economicshelp.org, 2018).
Moreover, government has developed various online websites so that job related information
could be easily found out. Demand management is another instrument, from where; government
is able to earn huge profit. For example, Adult Social Care of UK provided support to the people
so that they can lead a healthy life from this activity, government is able to earn £5 million from
the patient party and thus, by using instruments, government is able to achieve a sustainable
economy (local.gov.uk, 2018).
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Analyse the effects of economic policy decisions on the UK economy policy for the public
services
Brexit has left huge impact on UK and before Brexit UK is able to get complete support from
EU. Government of UK has taken various decision related to economic policy such as
monitoring inflation rate, GDP rate, employment rate, demand management in order to earn
economic sustainability on the country (Holston et al., 2017). As the income of people is quite
stable, price rate is increased and thus GDP rate of the country is developed. The decision related
to price development of products can leave medium impact on the UK economy.
On the other hand, inflation rate is monitored in order to achieve a sustainable economy in UK.
The inflation rate is increased, when the supply of products is also developed. It is found that UK
government constantly monitors the supply of products such as electricity and its demand, based
on which, the rate is set. Monitoring inflation rate and taking decision according to it can leave
short-term impact on the UK economy. In case of public service workers such as bank
employees, they focus on the market share so that they can assume the inflation rate of the
country.
The decision related to unemployment rate can leave long-term impact on the UK economy. It is
known to all, that economic development can be achieved when the people of UK have proper
education. It is found that in UK, around 3.9% of people are unemployed and the people do not
receive effective education (Ndou et al., 2017). In order to handle this situation, UK government
has arranged various training and educational program so that all people are able to receive
proper education. Moreover, various companies are opened so that unemployment rate can be
reduced. Therefore, it can be deduced that by reducing unemployment rate, UK government will
be able to increase their economic status. Moreover, they will be able to achieve the economic
sustainability properly.
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Analyse local, national and European policy objectives
Various policy areas have been identified such as human rights, sustainability, regional
development, inter agency-cooperation, reducing carbon-emission, and reducing anti-social
behaviour (Fisher, 2018). The local policy objectives for public service highlight sustainable
growth and inter-agency cooperation. As per this policy, the government should focus on the
development of the locality and local people so that entire country is able to achieve
development. The local policy objective of UK is to focus on the education of people so that
unemployment rate can be reduced. Moreover, employees of public service (social care workers)
support the people, who have learning difficulties in order to develop the social status
(instituteforgovernment.org.uk, 2019). Thus, it can be deduced that when people get proper
education, unemployment rate will be reduced and in return, sustainable economic growth can be
achieved.
On the other hand, national policy objectives is related to the human rights development and
reducing the anti-social behaviour of the people. As commented by Varsanyi (2017), employees
of security department constantly tries monitor the activity of people so that they can prevent the
any-social behaviour of people. In order to enhance the public confidence, Extradition Act 2003
has been introduced and people can express to the police if they notice any kind of suspicious
behaviour of others. Moreover, government of UK has trained dogs so that they can help to
identify anti-social behaviour of people easily (gov.uk, 2018). On the other hand, national policy
objective highlights the human rights of the people. Government of UK has introduced Human
Rights Act 1998 so that all people have equal rights in the country.
European policy highlights inter-agency cooperation and carbon-emission related policy. As
mentioned by Holston et al. (2017), the UK government has tried to maintain a culture among
the people so that everyone can complete their work appropriately. In case of public service-
commission, all agencies are interrelated such as education agency is related to electricity, fire
service and many others. It is quite evident that if people are not able to get effective education,
in future, they will not be selected for this role. Therefore, public service agencies should work
in an effective way so that people of UK can lead a prosperous life. European policy also
highlights the environmental aspect and government has introduced Environmental protection
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Act 1990 for saving the environment (Varsanyi, 2017). Thus, policy objectives help to run the
country in an appropriate manner.
Critically evaluate the implication of local, national and European policy upon UK public
services.
The local policy has been made in order to monitor the activity of the local people so that people
can lead a healthy life. For example, in security purpose, police provides protection to the local
people, whereas, CID provides security to the ministers of the country. Therefore, the operation
of police is smaller than the activities of the CID (Criminal Investigation Department) (Garnaut
et al., 2017). On the other hand, in case of national level, it is found that inter-relationship helps
to complete the work in an appropriate manner. The public service officers try to monitor the
status of the country so that effective decision can be made. Their role is to focus on the welfare
of the country for achieving best outcome. For example, it is found that if the local police notice
any case, they try to handle it by their own. In time of investigation, the police few times
understand that eminent people are related with this case and they directly communicate with the
higher level, which is CID. Thus, they work together in order to handle the fraud. Hence, it is
obvious that if the public service officers do not work properly, UK will not be able to operate
their country effectively.
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Conclusion
In order to draw the end line of study, it can be deduced that public service employees have huge
contribution in order to develop the sustainable economy of a country. It is found out that
principles of macro economy are to develop few strategies so that government can take effective
decision for reducing uncertain economic risk of the country. The principles are related to
economic growth, measuring budget deficit, inflation, employment and many others. The usage
of policy instruments such as exchange rate and supply demand is mentioned so that UK
government is able to develop a sustainable economic growth. National, local and European
policy objectives have been mentioned so that its effect on public service can be analysed. It is
observed that in the local area, police plays the important role for security, whereas, in the
national level, CID takes this responsibility. Thus, the roles of public service officers are
changed in the local and national level.
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Reference list
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Bozyk, P., 2019. Globalization and the transformation of foreign economic policy. Routledge.
Cowen, T. and Tabarrok, A., 2015. Modern principles of economics. Macmillan International
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Fisher, R.C., 2018. State and local public finance. Routledge.
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[Accessed on: 12th July 2019]
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news. MIT Press.
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local.gov.uk 2018, Example of Demand Management, Available at:
https://www.local.gov.uk/our-support/efficiency-and-income-generation/demand-management/
where-can-i-use-demand-management [Accessed on: 12th July 2019]
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