How can the UK sustain growth - Essay Example

?How Can the UK Sustain Growth? Table of Contents Introduction 3 Exposition 3 Key Themes 5 Present Issues 6 Sustainable Development 6 Key Concept 8Differing Perspectives 8 Analysis & Discussion 9 Conclusion 10 References 11 13 Introduction Industry development is also termed as a significant determinant of sustainable growth in the national level (WRAP, 2010). With this concern, the UK government has been focused on increasing its industrial outputs, on the verge of facing the risk of recessionary effects in the aftershock of the recent financial turmoil. As a result, the economy was able to obtain a substantial rise in its overall industrial output which led to the predictions that the economy might have been successful in mitigating the recessionary risks by a substantial extent. However, UK’s industrial output suddenly fell in the fourth quarter of 2013 which made the volatile situation faced by the economy more apparent to world traders (BBC, 2013). This further have raised the question that whether UK can sustain its growth in the future and if it can, then how. The discussion in this paper will emphasise on addressing this particular question following the assessment of the current economic situation witnessed in the UK. Exposition According to the article published in BBC (2013), with the title “UK industrial output rose 1.1% in December” reveals an apparent account of UK’s industrial performance in relation to its output generation. It is worth mentioning in this context that the sustainable growth of UK has been significantly influenced by its industrial, economic and production outputs over the years which has today, contributed to its recessionary risks. The data illustrated through this report states that the industrial output in the UK had increased by 1.1% in December 2012 as per the report of Office for National Statistics. The rise in the aggregated industrial output observed in December 2012 was constituted with the steeply increased production of the manufacturing sector by 1.6% after accounting a fall of 0.3% in the month of November 2012. Outputs generated from the energy production and mining sector also increased by 0.9% in the same period which was further denoted to be higher than the predictions made by analysts. Observing these hikes in the industrial output of the UK, various analysts affirmed that this level of development will enhance the potentialities of the economy to avoid future recessionary situations which was previously forecasted to be quite high in the aftermath of the 2008 recent financial crisis. However, UK’s industrial output depicted a sudden fall on the premise that UK has been successful in avoiding probable chances of recession. To be specific, industrial output declined by 1.9% in the fourth quarter of the financial year 2012-2013 which was further revealed to be a record fall in comparison to the output obtained in the third quarter of the same fiscal year. The major reason identified to act behind this huge fall in industry outputs have been the temporary shutdowns of oilfields in North Sea. However, possible chances were identified with concern to the rises in the energy production of UK’s North Sea energy production sector which could contribute towards the sustainable growth of UK even though no firm evidences were provided towards justifying this particular assumption (BBC, 2013; Office for National Statistics, 2012). Notably, it was the cause of these recessionary effects that the Gross Domestic Product (GDP) of the UK fell to 0.3% which depicted that the industry growth policies enforced by the government had certainly failed which is required to be further reconsidered in order to avoid the high risks of triple-dip recession (Inman, 2013). Source: (Inman, 2013) Key Themes The key themes of the article published in BBC (2013) represent the overall scenario of UK’s sustainable development in terms of industrial production increases which in turn imposes a strong influence on the sustenance of the UK economy with the prevailing chances of triple-dip recession. The discussion presented in BBC (2013) evidently indicates the relationship between recessionary effects and industry output fluctuations within an economic context. From an overall point of view, the discussion also depicted that falling industry outputs are quite likely to hamper the economic stability of a country revealing the highly volatile industry growth rate in the current performances of UK. On the whole, the article presents empirical evidences of the linkage existing between economic sustainability of the UK with its industrial output fluctuations and recession risks. Contextually, the key theme presented in the article depicted that an invert relationship exists between industry output and recession risks faced by an economy. Hence, if the industry output rises, the economy is likely to witness decreasing risks of recession and vice-versa (Greenwald, 1973). Present Issues In its recent performances, the UK has been witnessing certain significant limitations fundamentally owing to its highly fluctuating industrial growth rates and volatile economic conditions. The policy measures taken by the government was quite effective in mitigating the primary recession chances resulting in augmenting industrial output by almost 1.1% in the fourth quarter of 2013 in comparison to its third quarter industrial output for the fiscal year 2012-2013. However, on the premise argued by analysts that UK’s recession policies were effective enough to strengthen its economic conditions allowing greater hikes in the overall industry outputs, especially in the manufacturing sector, where the output accounted surmounted the forecasted rate, the industry output in the UK began to fall with a substantial gap from its predicted economic conditions. In the present scenario, the economy faces a vital issue in terms of falling GDP rates indicating towards the surmise of triple-recession dip. It is in this context that the currently swelling economic conditions of the UK indicate towards the issues concerning policy failure, poor performances of energy production sector, greater dependency on manufacturing sector, rising public debt, budget deficits, falling currency value and many other aspects, which are accumulatively, quite capable of increasing volatility of the economic conditions currently prevailing within this UK in the near future (The Guardian, 2013). Sustainable Development Since the beginning of the year 2000, UK government has been taking serious initiatives in order to bring sustainable growth within the nation. In this regard, UK government emphasised on implementing certain policy measures with the intention to facilitate a sustainable development within the nation with the motive to encourage the industrial sectors which were the leading contributors to the nation’s income principally. However, with the intervention of the financial crisis in the year 2008, the economy had to face significant disruptions in its sustainable development resulting in repeated recessionary situations (Kitching & et. al., 2011; WRAP, 2010). In its current practices, the nation is on the verge of expecting a triple-dip recession in its recovery phase from the recent financial crisis. Many analysts and economists have thus suggested the economy to focus on minimising its budget deficits with the application of effective policy measures to counter its recessionary effects (The Guardian, 2013). In its recent performances, UK government has been observed to render significant efforts in order to facilitate development within its industrial sector which is regarded to act as the lifeblood of any economy. Notably, the economic structure in the UK has been largely depended on its energy sector and manufacturing sector units. It is worth mentioning in this context that being a capital intensive industry, the energy producing and distribution sector of the UK had been performing poorly in the midst of the repeated recessionary situations. Additionally, the manufacturing industry, fundamentally comprising of small and medium sized firms were also performing incompetently which further weakened the interior structure of the economy. Hence, it is recommended by many economists that UK needs to reconsider its budgetary implications and fiscal policies with an expansionary strategy from a long-run viewpoint, which is quite essential in obtaining a sustainable development (Murphy, 2013). Key Concept The UK government has been taking various strategies in order to bring sustainability within the UK industrial sector, and to overcome the recessionary consequences which the nation had been facing since the recent financial crisis. In the recent situation, it can be observed that the economic trend of UK had been too fluctuating and volatile to ensure the sustainable growth of the nation. As can be observed from the above discussion, the economy had been witnessing almost all the signs of strong recession with currency exchange rate dip, budget deficit, increasing public debt and other most apparent characteristics of volatility and lack of sustainability in the economic structure. The key concept that has been presented in the article has been concentrated on the linkage existing between industrial output, recession possibilities and sustainable development of an economy. From the evidences obtained, it can be argued that these aspects are indeed correlated and have acted as a major influencing factor in obstructing the sustainable growth of the UK economy in its present situation. It is recommendable in this regard that the UK government should focus on adopting expansionary fiscal policies. However, in allowing larger percentage of government lending to avoid recessionary effects, the government might have to witness significant obstructions owing to its increasing public debt and surmounting budget deficits. Differing Perspectives By taking into consideration the UK industrial sector performances, it can be observed that there is a developing negotiation across the UK government and its industry players which can possibly play a vital role in order to bring sustainable recovery within the economy. In this sector, technology and innovation are the two significant aspects which might help to bring growth within the nation, if facilitated with eased tax rates and other expansionary benefits. Emphasising on a similar notion, the UK government has been taking several efforts towards developing a supportive environment by investing in its technology sector and encouraging innovation among the small and medium sized enterprises, which current constitute a larger proportion of the economy’s entire industry structure as well as its employment market. Moreover, in order to bring overall sustainable growth, UK government can also take several attempts by encouraging entrepreneurship programs which would in turn facilitate better job prospects and capital flow within the nation (Crown, 2010; George Freeman MP, 2013). From an overall perspective, it is worth mentioning that the economy must emphasise on encouraging flow of resources within its economic structure with lesser dependence on particularly two industrial segments, i.e. the energy sector and the manufacturing sector. Analysis & Discussion It has been observed that the major reason of industrial growth in the UK has been driven by its manufacturing sectors such as mining & quarrying, energy supply and water supply management. Contradictorily, the poor performance and the shutdowns in the ‘North Sea oilfields’ have hampered the sustainable development of the economy by a substantial extent (BBC, 2013). For instance, when assessing the outputs rendered from mining & quarrying, the aggregate revenue declined massively by 11.0% in third and fourth quarters of 2012 which was caused by the dip in the extraction of oil & gas by 14.1%. Even though, the output produced by mining & querying industry was raised by 1.2% in between November and December 2012, it fell substantially in the fourth quarter of 2012-2013 unveiling a stronger prospect for the alleged triple-dip recession (Office for National Statistics, 2012). Notably, the facts and figures depicted in the article reveal that the contractionary fiscal policies adopted by the UK government in the aftermath of its double-dip recessionary situation resulted in short-term development but failed in rewarding the economy with a long-run sustainable development opportunity. On the whole, the fiscal policies have been argued by the analysts to have raised the probability of a triple-dip recession by 70% in the recent phenomenon (Elliott, 2013). It is thus suggestible in this regard that the UK government should focus towards adopting an expansionary fiscal policy. One of the major flaws identified in the UK fiscal policies have been identified to be concentrated on the short-run recovery of its inflation rates which should be shifted towards recessionary effects. This particular policy measure shall prove highly effective to allow capital flow within its economic structure and thus be beneficial in combating the recessionary effects arising due to the triple-dip situation (Stewart, 2013). Conclusion The crucial idea that emerges from overall discussion is that UK’s industrial sector has been directly influencing the sustainable growth prospects of the economy by affecting its GDP rate. By considering the trend from the recession of 2008, it has been observed that UK has been experiencing major fluctuations in its manufacturing sector owing to its fiscal policy attention towards inflation rates rather than focusing on the long term risks of recession. Critically observing the fiscal policy measures implemented by the UK government, it can be suggested that due consideration must be provided by the company towards adopting an expansionary strategy which would facilitate its responsiveness towards decreasing industrial outputs and therefore help the economy in attaining sustainable growth. References BBC, 2013. UK Industrial Output Rose 1.1% in December. Business. [Online] Available at: http://www.bbc.co.uk/news/business-21366245 [Accessed march 17, 2013]. BBC, 2013. Economy Tracker: GDP. Business. [Online] Available at: http://www.bbc.co.uk/news/10613201 [Accessed march 17, 2013]. Crown, 2010. Manufacturing in the UK: An economic analysis of the sector. Department for Business Innovation and Skill. [Online] Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31785/10-1333-manufacturing-in-the-UK-an-economic-analysis-of-the-sector.pdf [Accessed march 17, 2013]. Elliott, L., 2013. 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