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Äîíåöêèé íàöèîíàëüíûé óíèâåðñèòåò ýêîíîìèêè è òîðãîâëè
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Òóãàí-Áàðàíîâñêîãî
Economic
policy of UK in time of global financial crisis
Offered article is related to the contemporary
state of economy of United Kingdom of Great Britain and Northern Ireland, its
further development and posible forecast. Due to global financial crisis most
of the changes happened on the world arena also have influenced one of the most
powerful economies, meaning economy of UK. Elaborating necessary policy in
appropriate direction can be considerably important for the future shifts in
economy of UK, and what posibly considered in the article.
During
the days of the British Empire the UK economy was the largest in the world and
the first to industrialise. Although it has declined in significance since, the
UK is still the sixth largest economy in the world by purchasing power parity.
It is a
member of the G7 (now expanding to the G8 and G20), the European Union
(although not the European Economic and Monetary Union -EMU - or Euro) and the
OECD (Organisation for Economic Cooperation and Development). It is also the
founding member of the Commonwealth, the association formed by former British
Empire states.
The
development of economy of such influential state at the world arena has a major
meaning for the whole world economic growth and development. So, further
investigation of contemporary state of the UK economy and direction of the
policy concerned this questions, can enable to make a reasonable forecast and
nearly predict posible changes in future.
The
British Economy is one of the most globalised economies in the world, thanks in
no small part to the City of London, considered to be the largest financial
center in the world. However, now that
the Global Economic Crisis has impacted the United Kingdom with particular
severity. The British economy is plunging into the depths of its most severe
contraction since the 1930s, with all the macroeconomic indicators pointing
south [2].
The
British economy in 2009 was declining at an even quicker rate than originally
suspected.
All
sectors of the UK economy seem to be struggling, with consumer confidence, the
housing market, employment and manufacturing either at the lowest point, or
dropping faster than ever previously recorded [1].
Seeking
to overcome blame for the recession and the fall out from his previous
statements that he had tamed the ‘Boom and Bust’ cycle, Prime Minster Gordon
Brown announced a major economic stimulus package. It will add to already high
debt levels above 40 per cent of GDP, leading to speculation that Britain’s
sovereign debt ratings would be downgraded and to further slides int eh value
of sterling.
By the
end of 2009, the UK economy is expected to have contracted 3.2 per cent (although
some economists are revising that figure further downwards), with UK public
debt rising to a staggering 70 per cent.
As to
concider economic policy it has to be said that as of Q1 2009, the Bank of
England has already cut Interest Rates to a historic low of 1.0 per cent, with
a drop to 0.5 per cent or even 0 likely.
Further
measures are probably needed, and this will include quantative easing, in other
words printing more money.
During
Gordon Brown’s stint as Chancellor, the Labour Party officially adopted the
Golden Rule and the Sustainable Investment Rule in fiscal policy, which state
that deficit over an economic cycle should only be used for future investment,
and only up to a national debt of 40 per cent of GDP.
By the
end of 2008 estimated public debt had already risen to 42 per cent, and could
rise to 70 per cent of GDP by 2010, meaning that the rules have gone out of the
window as fighting the recession takes priority. Keynesian economics says this
is the right thing to do, but it leaves the British government finances
dangerously over leveraged – and over leverage was, after all, what got us into
this mess in the first place [3].
Although, in many cases this direction of
policy can be efficient, but not really enough for supporting such a huge
country and after such serious damage to its economy. Forecasting in the midst
of such economic uncertainty and financial upheaval is, to put it mildly, a
challenge.
The
consensus for 2010 has now shifted to flat to negative growth. Forecasts range
from 0 per cent to – 5 per cent growth, with the median in the -1 to -2 per
cent range, although most economists state that major downside risks remain.
The
Bank of England Interest Rate, Inflation and the three month Treasury rate are
expected to stay low at under 1 per cent, under 1 per cent and 1.3 per cent
respectively[4].
The
budget balance is forecast to grow dangerously to -13 per cent of GDP, which
would take UK national public debt above 70 per cent of GDP.
In
conclusion, it is better to say that according to the contemporary situation
economic policy has to be driven to more effective and serious changes,
supporting all neccesary fields and areas of economy to prevent more
distraction. Recent conflicts on parliamental level have to avoided and all forces
have to directed only in one side – to find posible way out from the situation
and stop this process of reduction in all spheres.
Ëèòåðàòóðà
1.
UN Report: World Economic Situation and Prospects,
2009; Published January 2009 [Ýëåêòðîííûé ðåñóðñ] – Ýëåêòðîííî òåêñòîâûå äàííûå (99428 áàéò). 2009. - Ðåæèì äîñòóïà: <http://www.un.org>
2.
US Committee on Environment and Natural
Resources and the US National Science and Technology Council, 2009. Scientific
Assessment of the Effects of Global Change. [Ýëåêòðîííûé ðåñóðñ] – Ýëåêòðîííî òåêñòîâûå äàííûå (56778 áàéò). 2009. - Ðåæèì
äîñòóïà: <http://www. wnponline.org>
3.
Worldwatch Institute, 2009. State of the
World, 2008. Worldwatch Institute, Washington, DC.
[Ýëåêòðîííûé ðåñóðñ] – Ýëåêòðîííî òåêñòîâûå äàííûå (99458 áàéò). 2008. - Ðåæèì
äîñòóïà: <http://www. wnponline.org>
4.
Intergovernmental Panel on Economic Change
(IPCC), 2009. Fourth Assessment Report. The Economic Science Basis. Cambridge University Press. [Ýëåêòðîííûé ðåñóðñ] – Ýëåêòðîííî òåêñòîâûå äàííûå
(121878 áàéò). 2008. - Ðåæèì äîñòóïà: <http://www. cambun.org>