Economic Policies Influenced Or Enforced By Imf On European Countries Essay

In the views of the politicians, the economy was not one of a ‘Golden Age’. As the British Cabinet Paper wrote, ‘It is clear that ever since the end of the war we have tried to do too much…we have only rarely been free from danger of economic crisis’. This illustrates the fact that although the economy was not falling apart, it was not stable and not prosperous. There was also a lack of a plan to deal with the economy; the government merely adjusted the system as it went along, which sometimes resulted in high rises of inflation or sudden consumer booms that did not correlate with its ability to pay for them – causing a deficit.

The performance of the UK economy depends very much on the level of Aggregate demand within the economy. AD=C+I+G+(X-M). The UK economy can be judged by a number of key indicators mainly sustainable economic growth, low inflation (target 2%), a surplus on the

Modernisation of the British economy was one of the key priorities for the Labour government. By 1964, it was widely accepted that Britain was lagging behind other countries such as West Germany and Japan. Britain’s economy seemed to be trapped in the cycle of “stop-go”, with

“Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

Although, as discussed below, the Labour government also utilised the notion of economic rebalancing after 2008, the argument that New Labour had allowed the UK economy to become unbalanced formed one of the key critiques, alongside that of profligacy, of their predecessors in office by leading coalition figures. Rebalancing therefore exposes one of the discursive anomalies, or ironies, of the post-crisis era in the UK; in short, rebalancing renews the longstanding discourse around economic ‘decline’ often indulged by elite actors in the UK since the Second World War. Moreover, the emphasis on promoting manufacturing and Northern England, ahead of finance and the City of London, lends weight to some of the most critical declinist accounts of

The “Great Recession” is commonly used to explain the massive economic contraction that occurred in the United States during the fourth quarter of 2007. However, the actions of the United States spanned to other nations, leaving massive effect on the global economy. One nation that took on serious financial burden during this recession was the United Kingdom. This nation first faced the effects of the Great Recession beginning in the first quarter of 2008. Overall, the initial mass effects on the nation can be attributed to the nation’s reliance on the financial sector. In fact, after partially stabilizing in 2009, the country struggled with a double-dip recession between 2010-12, and continues to struggle with some of these effects.

Inflation; ‘a situation in which prices rise in order to keep up with increased production costs… result[ing] [in] the purchasing power of money fall[ing]’ (Collin:101) is quickly becoming a problem for the government of the United Kingdom in these post-recession years. The economic recovery, essential to the wellbeing of the British economy, may be in jeopardy as inflation continues to rise, reducing the purchasing power of the public. This, in turn, reduces demand for goods and services, and could potentially plummet the UK back into recession. This essay discusses the causes of inflation, policy options available to the UK government and the Bank of England (the central bank of the UK responsible for monetary policy), and the effects

Of all the examples of neoliberal policy failure since the Great Recession, the eurozone crisis stands out as a work of art. The European authorities who made this mess – the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF)—known as “The Troika”—provide one of the clearest, large-scale demonstrations in modern times of the damage that can be done when people in high places get their basic macroeconomic policies wrong. That it has happened in a set of high-income economies with previously well-developed democratic institutions makes it even more compelling.

Background: From 2009 onwards several Eurozone countries have come under pressure from the financial markets as a result of rising debt levels, economic contraction and decreasing solvency indicated by all major rating agencies. Through raising funding prices on the markets and the lack of trust in these Eurozone members – they were not able to finance themselves to sustainable costs anymore. One country after the other (Greece, Ireland, Portugal, Spain and Cyprus) had to be “rescued” by the then established financial support measures such as the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM). In exchange for these “bail-outs” countries had to fulfill certain economic conditions – mostly spending cuts – which led in turn to political change and instability.

The terrible internal economies control. The countries in euro area, especially Portugal, Ireland, Italy, Greece, and Spain lost their control over the domestic financial situation. Specifically, Greece had long standing financial problems. The government spent largely on the social welfare, and had a great number of public servants who had extremely generous wage and pension benefits. Besides, the government had little control over its budget deficit, leading a long standing financial budget overrun. In Ireland, the estate bubble greatly destroyed government tax income and consumption power of public. Portugal’s lasting recruitment policies led to a great number of redundant public servants. The Italian economy suffered from the high unemployment rate and high tax rate, and had a slow growth in recent years.

Dr. Clark: I am writing this brief policy memo in regard to the recent monetary crisis involving certain European countries, namely Greece and Spain. The focal organization handling the issue is the EU (European Union). The EU was established on November 1, 1993 by the treaty of Masstricht. It developed a single, regionalized, market structure through a system of standardized laws that apply in each member state so that citizens, goods, capital, and services are regional rather than local. With the establishment of a common currency, the Euro, the EU is also concerned with the overall economic and fiscal health of each member country. EU banks oversee localized financial institutions, and have the legal authority to enact localized changes in order to keep currency balanced. There are also branches of the EU that focus on legal and foreign policy issues, which sometimes blend into the economic realities of globalism (Europa, 2009). The EU acts as much more than an economic modifier, though, and member nations are encouraged to participate in cultural sharing (music, the arts, etc.), religious tolerance, and of course sport. This changes the overall rubric of the EU in that it actively seeks out foreign trade and markets as a large regional economic sector, so successfully that it counts for approximately 30 percent of world trade output (The EU Single, 2009).

The economic reforms initiated by Prime Minister Margret Thatcher since 1980’s has made the United Kingdom record steady economic growth in the 1990s. However, successive Labour governments increased government spending significantly. Since 2010, the government upheld austerity as the principal of its economic policy. In 2014, the country recorded its strongest economic growth since 2007 of 2.387 trillion dollars with GDP per capita at 39,350.64 dollars. The GDP increased significantly because of the enhanced performance of the construction, manufacturing, and services sectors. Retail sales also increased with unemployment relatively at lowest

The main issue, which has been seen in the emerging economies, is that the growing inflation and the hurdle of the debt crises. Similar situation has also been faced by the European Economies. This is not the first time that these economies are facing this hurdle, because in the previous year also there were some loans taken by the European Central Bank in order to help these economies. However, the payment of these loans was a hurdle for the central bank. This issue has now become more critical due to the emerging technical issue in the European economies (Handl & Paterson, 2013).

Preparing exit strategies now, not only for fiscal stimulus, but also for government support for the financial sector and hard-hit industries, will enhance the effectiveness of these measures in the short term, as this depends upon clarity regarding the pace with which such measures will be withdrawn. Since financial markets, businesses and consumers are forward-looking, expectations are factored into decision making today. The precise timing of exit strategies will depend on the strength of the recovery, the exposure of Member States to the crisis and prevailing internal and external imbalances. Part of the fiscal stimulus stemming from the EERP will taper off in 2011, but needs to be followed up by sizeable fiscal consolidation in following years to reverse the unsustainable debt build-up. In the financial sector, government guarantees and holdings in financial institutions will need to be gradually unwound as the private sector gains strength, while carefully balancing financial stability with competitiveness considerations. Close coordination will be important. ‘Vertical’ coordination between the various strands of economic policy (fiscal, structural, financial) will ensure that the withdrawal of government measures is properly sequenced -- an important consideration as turning points may differ across policy areas.

In the year of 1327, Kind Edward III of England defaulted on his Italian debts. This caused the banks of Bardi and Peruzzi in Florence to collapse. Who would know that over 650 years later, the world would still have these types of problems? After World War II, the need for an organization like the IMF was finally realized. After the war, politicians and economists began to work on blue prints for a postwar world. They envisioned a liberal international economic order, based on stable world currencies and revived world trade. The International Monetary Fund (IMF) finally came into existence on December 27, 1945. On this date, twenty-nine