Business in UK Essay Example | Topics and Well Written Essays - 1750 words

Business in UK - Essay Example It is one of the key options for the effective economic management. According to the British Economist, Mr. Keynes, the public spending needs to be increase when the private investment and spending is unbalanced and inadequate. There are two categories of spending, such as Capital spending and current spending. Capital spending considers spending on the physical assets, including roads, bridges, schools, and hospitals. On the other hand, current spending includes expenditure on raw materials and wages. Government describes fiscal policy by writing legislation and setting taxation level. The changes in fiscal and monetary policy can affect the businesses both directly or indirectly. The impacts are highlighted below. Fiscal policy generally engages changes in spending and taxation policies. Lower tax considers high disposable income for people and more cash to invest for business in equipments and jobs. On the other hand increasing consumption of taxes or income usually address less disposable income for people that can be decelerate the activities linked with the business (Ruddock, 116). It is evidenced that increasing ageing population and budget deficits should be addressed in order to sustain the long term business growth. Changes in the short-term interest rate generally manipulate long-term interest rates. Mortgage rate is the effective example of it. Low interest rate stands for higher disposable income for people and limited interest expense for a particular business. The combination of these two considers high business profit. High interest rate can affect the business firms as it results Lower sales and profit and higher interest expense. Changes in the interest rate have negative impact on the stock prices that can affect consumer spending. Several taxation policies have negative impacts on the business cost. For an example,