United Kingdom Economy. Country History and Market System

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United Kingdom Economy
Executive Summary
The United Kingdom (U.K.) is among the best economies both in Europe and globally. Its categorization as a developed country speaks much about the country. It is home to several manufacturing industries such as fishing, automobile, and agriculture although the service sector has been its formidable strength for a while. Its gross domestic product (G.D.P.) over the past decade has remained above 2 trillion dollars despite the intense pressure from the 2016 Brexit referendum. Moreover, its position in the European Union (E.U.) offers immense advantages as most of the countries in this region are well developed and hence, great trading partners. Japan and United States of America (U.S.A.), which are among the greatest economies, are exceptional trading partners with whom the U.K. has established a great trading partnership. Moreover, the Far East countries such as China that are fast-developing are also setting in as very essential partners. On the other hand, the government has played its important role as a player in the free market. These include various fiscal and monetary policies. These have been introduced to control the direction of the market or the wellness of the society. Measures such as raising or lowering taxes to control production and consumption have been used by the U.K. in influencing the direction of the economy. Government spending has also been another strategy. These initiatives have been relevant in the different phases of the economy.
1.0 Country History and Market System
The country’s growth rise to prominence has been as a result of various economic phases. The industrial revolution in the 19th Century marked the most important era in which the U.K. people capitalized to advance their economy. However, the World War II left the country in a devastating state particularly in its manufacturing sector. The recuperation process was gradual and took approximately four decades. Joining the European Economic Community (E.E.C.) in1973 was a substantive move as it provided additional stimulation in which case, it advanced the competitiveness of the U.K. significantly. E.E.C. is the modern-day European Union (E.U.). In the ‘90s, the country’s economic growth rates faired relatively well in comparison to other top industrial countries such as Germany. As time progressed, the focus shifted from the manufacturing industry to the services industry. The gross domestic product of the former has dwindled significantly. For instance, in 2015, the U.K. had a nominal G.D.P. of about $2.849 trillion. A major proportion, 79.7%, came from the services sector while 18.8% of it was equated to the manufacturing sector (Pariona). The U.K. upholds a free market economy whereby the forces of demand and supply orchestrate the direction of the economy. Buyers and sellers have an exceptional knowledge of the market and thus, possess the most of the decision-making power. In the course of its economic development, U.K. has become a major trading partner with countries such as the United States of America (U.S.A) and Japan. These countries have become their major investment and trading partners. Moreover, they choose the U.K. as their European base. Fast-developing East Asian nations have become attracted to the open market in the U.K. Eventually, the U.K. is bound to grow even bigger.
2.0 Government’s Role in the Economy
The U.K. government influences the market as a direct participant or an indirect participant in private markets. The former includes it being a buyer of supplier of products or as a market maker while the later includes actions such as subsidy, taxation, and regulation. Each of these actions has their advantages and disadvantages. However, the major drive to effect these changes arises from the desire to correct market situations or failures when they perceive that private entities are unable to optimize value that they could create for society. There two major roles of the U.K. government in the economy. First function is in regulating and controlling the economy while the second is promoting economic stability and growth (Office of Fair Trading). The first case involves the input of both fiscal and monetary policies. On the other hand, the latter incorporates policies. The government raise or reduce taxes relative to the side-effects of the products. For instance, to curb pollution from motor-vehicles, the government can increase the vehicle tax to limit their production. In contrast, they can decrease tax for e...