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The markets had assumed that the debt by Euro zone was safe. This made the investors think that all members thereby making them willing to maintain debts even at low interest rates despite countries including Italy and Greece having high debt levels had backed them. After the credit crunching, the investors began being to be more skeptical about the European finances. The other unfortunate occurrence was that the European Union had no strategies in place to deal with the sudden panic. The diagram below shows some debt from Selected European countries between 2007 and 2010.
Pettinger on the economics journal of October 2011, tried to analyze the Euro economic crisis critically where he applied a single currency meant that several of the solutions regarding economic problems could not be used. The most difficult task is to reduce the government borrowing levels while managing lower unemployment and economic recovery. He studied several European economies including Greece, Ireland and Portugal and found the following problems.
Pettinger best-suggested solution was currency devaluation. This refers to the reduction in the value of exchange rates .This would see regaining of competitiveness, reduction of budget deficit, increase employment rates, and aid in economic recovery. Since economic recovery is the key to reduction in budget deficit. He suggested that Countries should stop the use of the Euro and maintain their own currency. Most countries agree that the renewal of the economic growth is vital in saving the Euro (Pettinger, 2012; Pg. 68). The obstacle is that the effects of steps such as having a banking union, the recently agreed rescue plan may have positive effects to the banking system but may not have any effect to raise the competitiveness in the region’s economies.
The second option was inflation, where the country should try to boost
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Seven of these ten countries would join once they are able to meet the strict guidelines of Eurozone. Rest of the three countries, including the United Kingdom, have an opt-out exception and will not join the Eurozone until the government takes a decision through a political referendum.
There are different economic variables that affect the lives of people. One of those variables is inflation. Inflation can be defined as a persistent substantial rise in the general levels of prices (Dictionary).
Any international trade will involve in any two instantaneous transactions: Exchange of the products in a physical form Sale or purchase of foreign currency In any international trade, the sale or purchase of any product will affect only one the parties in the foreign exchange.
As the name implies, VAT is collected at each stage of the economic value addition process required to produce a good or service. This stands in contrast to the sales tax scheme where tax is charged to the end consumer directly. VAT receipts are paid for by the goods and services handler unlike the sales tax system where the end consumer pays up tax.
Interest rates are basically used to manage monetary conditions and mobilize and deployed the resources in an efficient and effective manner. Interest rate usually remains the supervision and administration of government. Interest rate is calculated on reduction balancing method.
The research is on the Supermarkets in UK. In this chapter, I have studied and analyzed the works that has been done previously on this topic. In the literature review part I will analyze the companies’ performance in last five years. The companies selected