Political Factors - EMU, Privitisation And Deregulation, Lanour Markets And Supply Side Policies, Competiton Policies Flashcards
The European Monetary Union
Single currency so all monetary transactions for those countries in the system moved into euros
UK chose not to be apart of that as by 2014, the UK economy was one of the fastest growing in the developed world whereas the rest of Europe was facing deflation
- all UK and eurozone transactions are costly with exchange rates
- pound has performed better than the euro against the dollar so UK firms exporting to the US find that goods are less competitive against those from EU countries
- some choosing to relocate outside the UK but high costs so babe stayed here
EU growth
EU continues to expand its boundaries as it creates many new opportunities for businesses while introducing new problems and risks
EU now has a more diverse population base than ever before
Many countries keen to move their economies forward as rapidly as possible to increase the range of consumer goods to provide better jobs for their populations and to import/export to other EU countries i.e mix of Eastern Europe with poorer liv g standards and Western Europe
- UK firms moved production to newer member countries to take advantage of low cost labour + gain access to new markets
- demand for new infrastructure and technological development with the new moves
- EU citizens moving to UK to where there are skill shortages to help UK economy operate more efficiently so UK now reliant on the EU workers but can put a strain on sectors and areas too (benefits, healthcare, housing, education)
EU Management
Huge diversity in terms of competition, consumers, demand and production so must be taken into account - not uniform at all!
Managers of a business entering Europe need to have clear objectives for the future
Careful planning needed to reduce risks and understanding the new market and be willing to adapt
Privatisation
The act of passing ownership of a business from PUBLIC sector to PRIVATE SECTOR by selling shares in the bus ness
Mainly monopolies being privatised
Privatisation for and against
:) private sector businesses are subject to market forces and need to therefore operate efficiently being aware of supply and demand conditions
:) needs to be profitable if it’s privately owned to satisfy its shareholders to be able to survive
:( some business sold off to cheap and valuable long term things were sold off for short term quick cash
:( resulting in new suppliers which is double up of natural monopolies that aren’t needed and not in interests of the general public
:( private businesses won’t trade in unprofitable areas
Who are regulators
Have the power to cap price increases and demand efficiency savings through investment
Deregulation
Removal of outdated laws interrupting competition so the consumer was paying high prices
The removal of these laws led to a rapid increase in providers lowering the price to the consumer
In the long term, some areas of the market have better services with more choice, and greater efficiency but others face poor provision or a complete lack of services
Labour markets
Governments have shifted their intervention in labour markets from the DEMAND to the SUPPLY side
Used measures to encourage an increase in the number of people entering the labour market + try improve their skills and quality of labour
May take a long time to have an impact on the economy but less likely to have the adverse economic effects that may come with demand management
Labour market SUPPLY-side policies
Training + education as vitally important in the labour market
More lie,to to be the case in a developed economy where there is less likely to be less demand for unskilled workers
Government has tried to improve the skill level of the UK population through measures like National Curriculum, University access and Training schemes for those who are long-term unemployed
Reduced employment regulations to make it easier for employers to take on extra workers
