The time of the global economic and financial stagnation has brought lots of innovations, or returns to the past ideas, in the sphere of economic regulations. The credit crunch crisis has also added to the instability in the countries, and the United Kingdom Government has taken serious steps to fight that instability by increasing its share in certain banks and building society, and by the literal implementation of the state-run economy. Such a policy has its pros and cons, as well as its influence upon the development of the country’s economy can be different. This paper examines the ways in which the state regulated economy can change the balance of powers in the UK production and sales areas.
Initially, it is necessary to state that the economy of the United Kingdom is the capitalist one, which presupposes the existence of private entrepreneurship and businesses (CIA, 2009). The implementation of the state regulated economy will inevitably damage the principles of freedom in business and result in the decrease of the performance efficiency of the small and medium sized businesses. Moreover, such a situation will obviously make the foreign investors more cautious about investing their funds into the UK based production centers and manufactures. Accordingly, the main production areas of the United Kingdom will suffer from the lack of freedom and state regulation of economy (Economy Watch, 2009).
Among the main products that the United Kingdom launches to its domestic and international markets there are machine building production, vehicles, technological equipment, oil, petroleum, clothes, food and food processing services, etc (CIA, 2009). These branches of economy are known to be on the decrease of their production and sales rates as far as the demand to these products and services has been decreasing over the recent months. The prices for the goods and services aforesaid are also falling causing the losses to their producers who, moreover, have to cut their production facilities because of the inability to fund all the nation- and worldwide networks. In this situation, state regulation of the economy can damage the interests of these producers further (Economy Watch, 2009).
However, the positive sides of the state-run economy can also be observed. First of all, the already mentioned increase of the government participation in the control over the banking institutions and the building societies of the United Kingdom can restore the credibility of the latter in the domestic and international arena (Economy Watch, 2009). In other words, be sure about the stability of the banks supported by the government, the domestic and foreign customers will more willingly cooperate with these banks (BBC, 2009). This is especially important for the UK, whose capital London is viewed as the global financial center, with the branches of HSBC and other world-leading banks situated in the City (CIA, 2009).
To conclude, the United Kingdom Government has taken serious steps to fight that instability by increasing its share in certain banks and building society, and by the literal implementation of the state-run economy. Such a policy has its pros and cons, as well as its influence upon the development of the country’s economy can be different. In any case, in the period of financial and economic stagnation, the stability that the government support might offer to the banks and businesses is rather significant, which is the major argument in favor of the state-run economy.
Reference List
BBC 2009, Inflation Measure Turns Negative. BBC News. Web.
CIA 2009, United Kingdom. CIA World Factbook. Web.
Economy Watch 2009, UK Economy. Economy Watch. Web.