Introduction of the UK economic environment--National-zone--V-Next

Introduction of the UK economic environment

The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, Lying off the north-western coast of the European mainland, the UK includes the island of Great Britain, the north-eastern part of the island of Ireland and many smaller islands. The total area of the United Kingdom is approximately 243,610 square kilometers. In the 2011 census the total population of the United Kingdom was 63,181,775. It is the third-largest in the European Union, the fifth-largest in the Commonwealth and the 22nd-largest in the world. The economy of the United Kingdom is highly developed and market-oriented. It is the fifth-largest national economy in the world measured by nominal gross domestic product (GDP), ninth-largest measured by purchasing power parity (PPP), and nineteenth-largest measured by GDP per capita, comprising 3.5% of world GDP. In 2016, the UK was the tenth-largest goods exporter in the world and the fifth-largest goods importer. It also had the second-largest inward foreign direct investment, and the third-largest outward foreign direct investment. The UK is one of the most globalised economies, and it is composed of the economies of England, Scotland, Wales and Northern Ireland. Service industries, especially the global financial service industry is crucial to the UK economy. The UK service sector makes up around 79% of GDP. London, capital of this country is one of the three "command centers" of the global economy, it is the world's largest financial centre alongside New York, and it has the largest city GDP in Europe. Besides, the automotive industry is a significant part of the UK manufacturing sector and employs around 800,000 people, with a turnover in 2015 of £70 billion, generating £34.6 billion of exports (11.8% of the UK's total export goods). However, In a referendum on 23 June 2016, 51.9% of the participating UK electorate voted to leave the EU, out of a turnout of 72.2%. On 29 March 2017, the UK government invoked Article 50 of the Treaty on the European Union. The UK is thus due to leave the EU at 11 pm on 29 March 2019. It seems that the UK and its related markets may face an uncertain future.


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LONDON (Reuters) - The Bank of England will nudge up borrowing costs next month, according to economists polled by Reuters this week who have grown a bit more confident Britain will strike a free trade deal with the European Union. Britain is due to part ways with the EU in eight months, ending a 40-plus year marriage, and on Monday Prime Minister Theresa May narrowly won a series of votes in parliament, keeping her newly arranged strategy on how to leave just about on track. May has vowed to stick to her plan to negotiate the closest possible trade ties with the EU. But she faces another battle - over trade - in parliament later on Tuesday, with pro-EU lawmakers hoping to influence her plans. The latest Reuters poll, taken mostly ahead of Monday's vote, gave a median 20 percent chance of a hard Brexit whereby no deal is reached by the end of March 2019. That was unchanged from a June poll. Instead, the two sides agreeing on an EU-UK free trade agreement was seen as the most likely outcome, as it has been since polling first began on this in late 2016. Second most likely was membership of the European Economic Area, under which Britain would pay to maintain full access to the EU Single Market. Those views appear to have solidified from last month, with more common contributors picking those two options. In third place was leaving without a deal and trading under basic World Trade Organization rules. Bringing up the rear was Brexit being cancelled, but no respondent put that as their first or second most likely option. The overall order was the same as in a June poll. "Our base case remains that the EU and the UK will come to a last-minute agreement on a comprehensive Free Trade Agreement, which would commence when the transition period ends in December 2020," said Stefan Koopman at Rabobank. "Given how UK domestic politics evolve, however, it would be foolish to underestimate the risk of a hard Brexit without such an agreement." MODESTLY SOLID While the recession predicted in the event of a leave vote in the 2016 referendum never happened, Britain's economy slowed rapidly at the turn of 2018. Growth was predicted at 1.3 percent this year and 1.5 percent next, lagging its peers. Still, there is only a median 20 percent chance of a recession in the coming year and a 30 percent likelihood of one in the next two years. But highlighting uncertainty, the highest two-year forecast was for 50 percent. Marc Ostwald at ADM Investor Services said it was "very difficult to assign a probability when the Brexit negotiations outcome looks to be ever more binary." BoE Governor Mark Carney warned on Tuesday a no-deal Brexit would have "big" economic consequences and prompt the MPC to reassess the economic outlook and interest rates. With solid but modest growth and inflation expected to average 2.5 percent this year and 2.1 percent next, close to the Bank of England's 2 percent target, the central bank is not expected to tinker much with monetary policy. On Aug. 2 policymakers will add 25 basis points to Bank Rate, taking it to 0.75 percent, 47 of 75 economists polled said. That will be followed by an identical increase soon after Brexit is due to be completed. The next move won't then come until 2020, when the Bank will add 50 basis points over the course of the year, putting Bank Rate at 1.5 percent, the poll found. Markets are pricing in around an 80 percent chance of an August hike following more upbeat second-quarter data and hawkish comments from members of the Monetary Policy Committee. "Following indications of a Q2 rebound and continued hawkish comments from the MPC we now join the market in forecasting a 25 basis point rate rise from the Bank of England," Elizabeth Martins at HSBC told clients. But that could all change. In a poll taken ahead of a May meeting, economists were convinced the Bank would hike that month, only for them to make the biggest turnaround in Reuters polls history a few weeks later to say policymakers would hold fire until August.


Poundworld has said it will close a further 40 stores, resulting 531 more job losses. The discount goods retailer, which went into administration in June, said the stores would close on 24 July. Poundworld had already announced plans to close 105 of its 335 stores, having failed to strike a rescue deal. Its administrators, Deloitte, said they were still looking for buyers for all, or parts, of the remaining business. Clare Boardman, joint administrator, said: "We would like to thank all the employees for their continued support and commitment during this difficult time. We are keeping staff appraised of developments as they happen." At least two potential rescue deals have failed so far, including one from the chain's founder Chris Edwards, who was offering to buy around half of the stores. Mr Edwards, who founded Poundworld in 1974, was critical of how his offer was received by Deloitte, and said he was "shocked and surprised" that he was turned away. In June, Alteri investors, which specialises in buying struggling retailers, also pulled out of takeover talks. Poundworld went bust in early June after struggling with tough competition on the High Street from rivals including Poundland and Poundstretcher. It was also hit by the fall in the value of the pound after the 2016 Brexit referendum, which has pushed up the price of imported goods. Poundworld employed about 5,100 people before it went into administration and around 1,800 redundancies have been announced since then. Deloitte has also made 100 people redundant at Poundworld's head office in Normanton, West Yorkshire.


A World Cup win by Harry Kane’s England would be an “unalloyed, unadulterated absolute good” for the UK economy, the governor of the Bank of England has declared. Mark Carney’s increasing confidence in the UK economy was also being interpreted as a possible hint that interest rates could rise in August when the Bank of England’s rate setters meet next week to decide what do about the current level of 0.5%. The Bank of England governor – born in Canada and a holder of an Irish passport – said of Kane’s team: “This is a pleasure to watch right now so we are all behind them.” England play Sweden in the quarter finals on Saturday at 3pm when retailers are already preparing for a sales bonanza, fuelled by the weekend’s sporting events and the hot weather. The team progressed after beating Colombia in England’s first-ever World Cup victory in a penalty shoot out. The UK’s biggest supermarket chain Tesco said last week has been its strongest yet this year for beer sales and it expected another bumper weekend with 50 million bottles or cans of beer to be sold along with nearly a million bottles of wine – and 6 million ice lollies. Carney was speaking at event in the north of England, and reportedly seen wearing a label badge with the Three Lions symbol of the England team, when he was asked about the economic impact of a win by Kane’s team. His remarks were reported by a number of news outlets. “It would be an unalloyed, unadulterated absolute good. Everything would be good,” said Carney, who quipped he intended to get one of the waistcoats worn by team manager Gareth Southgate. The £65 waistcoat can be bought in Marks & Spencer and some sizes appear to be low on stock on its website. Earlier this week, the M&S – which supplied the three-piece suits for the England football team – said waistcoat sales were up 35%. England’s progression through the tournament – along with the sunny weather – is being credited with boosting sales of beer, BBQ items and wide-screen TVs. In its latest predictions issued on Thursday, Tesco reckoned it was ready to sell nearly 3.5 million sausages, around 4 million burger and 3 million punnets of strawberries. Tesco BBQ foods buyer Natalie Bastow said: “Fantastic weather and the world’s biggest sporting event are creating a real carnival atmosphere across Britain this week … This is already the best summer for BBQ meat sales for several years.” The British Beer and Pub Association has already predicted that beer sales this weekend could provide £24m boost to the economy and £3.6bn in taxes for the Chancellor.

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