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Uk Economy

In: Business and Management

Submitted By francisbrobby
Words 820
Pages 4
What Will Happen in the Future?
An important indicator of what can be expected in the future is the 2010 pre-budget report. Growth estimated at 1.5% in 2010, reaching 3.5% in 2011 (figures reduced in the March Budget). This level of growth is supported by short term increases in government spending - estimated to rise by £31 billion. However, the government deficit is to be halved by 2013, suggesting potential conflict will arise. Experts, such as the man responsible for managing £618bn in bonds at Primco - Mike Amey, believes that the performance of the sterling will be crucial for the recovery, because of the way it impacts inflation via imported goods prices. Primco also predict a medium-term government deficit reduction - the need for fiscal reform being agreed by all three political parties.
One of the main focuses in the 2010 budget was support for small businesses. Clearly the need to help small businesses survive is essential for the future success of the economy. For example business rates are to be cut for one year, consequently 345,000 small firms will pay no business rate. This is likely to yield many positive externalities, investment will increase, actual output will increase closer to potential output and importantly employment should increase as the smaller firms have a greater profit margin from reduced overheads.
Supply side policies are also predicted to be important in the immediate and long term future as the economy stabilises and recovers. One way of improving the long term stability of the economy is to increase education and training, to enhance Britain's flexible labour market. The only main policy in the budget 2010 was a one off payment to universities to provide more places for maths, science and engineering students. This is perhaps an indicator of what expertise the economy requires, a return to a more productive manufacturing…...

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