Country profile-----Britain
...omic, Social and Technological factors. These are four key areas in which to consider how current and future changes affect the business. Strategies are developed which address any potential opportunities and threats identified. The best advantage of this analysis is to find out the underlying opportunities and threats from every possible aspect systematically. While, in my paper, things are focused on analyzing the results of standard of living, economic growth, unemployment rate, inflations, GDP per capital and economic freedom, which need to be pondered over by a number of environmental factors. Therefore, PEST analysis, which offers even every aspect for analyzing the business environment, is the best choice. However, using PEST analysis doesn’t mean that it must comprise of every aspect, in my paper, I propose to pick up and focus on some factors, not from all of the four aspects (P.E.S.T) but the significant ones in the economic development. In terms of this method, it is easier to find out the opportunities and threats and look for the British economic developing trend. The following 2 aspects are recognized as the main factors. Political/Legal Factors Things to consider include: a) Government spending (e.g. on NHS, roads, schools) b) Policies of different political parties c) New laws likely to be passed d) Regulation (e.g. trains, telecoms, electricity production) e) Health and safety f) Tax changes g) Tariffs and trade barriers (foreign trade) h) Foreign laws when operating in different countries i) Employment law Economic Factors Things to consider include: a) Interest rates b) Exchange rates (foreign trade) c) Position in economic cycle d) Inflation rates e) Strength of the stock market f) The strength of the global economy. See (http://www.strategicbusinesscoaching.co.uk/id27.htm) Body As the standards (standard of living, economic growth, unemployment rate, inflations and economic freedom) influence each other, it is hard to discuss them separately. For this reason, I will reorganize them in this way: firstly, I will generally analyze economic growth factor and see the results of it. Look at the outcomes and then try to look for the reasons from the other factors. Economic growth Basically, economic growth is measured by the GDP growth. GDP is the abbreviation of gross domestic product, which is defined as the value of all goods and services produced less the value of any goods or services used in their creation. The calculation of the annual growth rate of GDP at constant prices is intended to allow comparisons of the dynamics of economic development both over time and between economies of different sizes. The growth rate is calculated from figures at constant prices since these give volume movements only, i.e. price movements will not inflate the growth rate. (Source: Eurostat) The volume index below is the comparison of EU 15 countries on average, EU 25 countries on average and UK in real GDP growth rate from 1996 to 2007, which including the forecast. [(f) Stands Forecast] 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 EU (25 countries) 1.7 2.7 3.0 3.0 3.9 1.9 1.2 1.2 2.4 1.6 2.1 (f) 2.4 (f) EU (15 countries) 1.6 2.6 2.9 3.0 3.9 1.9 1.1 1.1 2.3 1.5 2.0 (f) 2.2 (f) United Kingdom 2.7 3.2 3.2 3.0 4.0 2.2 2.0 2.5 3.1 1.8 2.3 (f) 2.8 (f) (Source: Eurostat) As we can see from the table, the rate in UK starts from 2.7% in 1996 and keeps 3.2% growth in the following 2 years, reaching a top of 4% in 2000. After year 2000, the rate drops down to at 2.2% in 2001, and another 0.2% decline in 2002. However, the rate rises from 2003 and recovers at high increasing level again in 2004. Although the rate falls to 1.8% in 2005, in whole, the real GDP growth in UK is higher than the average of EU 25 and EU15 from 1996 to 2005 except in 1999 which equals though. Look at the data in the table above, the forecasts of the growth for 2006 and 2007 are made by 2.3 and 2.8, which appear their higher level to the others in the same period, thus it is obviously seen that the UK has the higher growth rate. Therefore, the implication of the table above for British economic growth is that Britain has got rid of the embarrassing situation of the slow economic development and begins its economic revival. The British economic revival generally results from the government’s policies, which believes the market. Although there was a storm of thought in John Major’s period, `market believe` valuation is rooted by the success of Mrs. Thatcher. In her period, less regulation and privatization stimulated the companies’ efficiency and activation in developing their own businesses and earn more profits. As a result of it, government can receive more money in spite of low tax level. In addition, government has more time to perfect its system and pays more attention to its function instead of protecting state owned industries. Moreover, instead of government, private companies invests their money to build the steel, public building and so on which saves huge amount of money for the government. As the great success of the privatization, no matter which Party in power, all believe the market, and then the beliefs was brought to the British economy, which is good. Besides the rate of real GDP growth, there are some other standards for measuring the economic growth, such as standard of living and the GDP per capita in PPS (purchasing powder standard). Here, information likely concerns about the latter one. The GDP per capita in PPS is a benchmark of measuring how wealthy the country is. The volume index of GDP per capita in PPS below is expressed in relation to the European Union (EU-25) average set to equal 100. If the index of a country is higher than 100, this country's level of GDP per head is higher than the EU average and vice versa. Basic figures are expressed in PPS, i.e. a common currency that eliminates the differences in price levels between countries allowing meaningful volume comparisons of GDP between countries. 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 EU(25 Countries) 100 100 100 100 100 100 100 100 100 100 100 100 EU( 15 Countries) 109 109 109 110 110 110 109 109 (f 109 (f 108 (f 108 (f 108 (f UK 109 112 112 112 113 113 116 116 116 116 (f 116 (f 116 (f EU (15 countries)=EU-15, EU (25 countries)=EU-25 Please note that the index, calculated from PPS figures and expressed with respect to EU25 = 100, is intended for cross-country comparisons rather than for temporal comparisons. Please be aware that this indicator has been rescaled, i.e. data is expressed in relation to EU-25 = 100. Thus, they are not comparable with previous releases based on EU-15 = 100. (Source: Eurostat) Contrast by EU-15, the data shows that UK begins at the same level at 109 in 1996, but UK rises to 112 in 1997 whereas EU-15 remains the same until 1999 where is 110 though., Instead of declining from 2002, UK keeps on increasing steadily, reaching at 116 for 3 years. In whole, differs from the fluctuation in EU-15, UK rises generally and shows a bright developing trend. This means that UK is wealthier than the average of EU-15 from 1997; British people have more money to spend, British economy is growing healthily. According to the data analyzing on the British economic growth, a general decision can be made: compare with EU-zone, UK economy is growing faster, more steadily. Standard of living The benchmark for measuring the standard of living in a country is to use real national income per capita. This is found that dividing real national income (GNI) by the total population. The chart below shows data on per capita gross national income in UK since 1970. The data is expressed in dollars. The bar chart shows a slight to rapid increase from period to period. Before 1979 period, per capita national income rises slightly, after 1980, although the gross per capita begins to decline, the level is still much higher than 1970’s. However, the figure begins to climb fast, from less than 7,500$ in 1984 to 18,750$ in 1992. Here, I need to express the data in a common currency (nearly always the US dollar). In the chart above we see a fall in per capita GDP in 1993. This was not because the British economy was in recession - indeed the economy enjoyed a recovery in output and incomes in this year. The reason for the dip in per capita income (measured in US dollars) was that the pound fell sharply against most other currencies (following our departure from the exchange rate mechanism). This reduced the value of UK national output when measured in another currency. The strong pound since 1996 has had the opposite effect - boosting the UK's position in the international living standard league. Therefore, it implies that the UK economy has being increased since 1984 and kept the rising trend for 18 years. British people have more money to spend and therefore their standard of living is improved as the growth of their earnings. Unemployment rate The declines of unemployment rate equals to the increase of employment rate, therefore, what I put next is the comparison of the total employment rate growth (1.1) and total employment rate (1.2) in UK and the average of the EU-15. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 EU (15 countries) -1.9 -0.1 0.8 0.6 1.0 1.8 1.9 2.2 1.5 0.7 0.3 0.7 United Kingdom -2.9 (p) 0.8 1.2 0.9 1.8 1.0 1.4 1.2 0.8 0.8 1.0 1.0 Figure 1.1 (Source: Eurostat) The table above shows the employment rate growth in UK and EU-15 during the period of 1993 to 2004. As we can see from the table, UK starts at -2.9% in 1993 whereas EU-15 is only-1.9, but th...