Economics Essay

UK Economy

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In 2002 , the unemployment rates in Spain , France and Italy were significantly higher than in the UK . Examine the factors which might explain why the UKs unemployment rate was lower than in these countries

United Kingdom 's Economic Low Unemployment Advantage

In 2002 , according to the Organization for Economic Co-operation and Development (OECD , UK 's standardized unemployment rate is 5 .1 . For France the standardized unemployment rate is 8 .9 , for Spain is 11 .5 while for Italy is 9 .0 . Let us examine first why

UK had this low unemployment rate compared to the France , Spain and Italy . First UK is very attractive to foreign investors compared to France , Italy and Spain . This is partly because UK has a proven track record of economic stability strengthened by its government economic policies . UK has one of the most stable exchange rates which equates to stability for investors . Increase in foreign investors also means an increase in employment , resulting in lower unemployment rate . If UK had not been attractive to investors , there would have been no rise in real GDP in UK brought about by new business and expansions in 2002 . Another determinant factor of the low unemployment rate is the labour environment in UK . UK is home of highly skilled and dynamic labour force . Its pool of workforce comes from top universities and trained by R D centers (Research and Development . This workforce together with UKs less constricting laws for labour generates high level of employment . In terms of innovation UK is far advance compared to France , Spain and Italy . Although UK has only 1 per cent of the world 's population but conducts 5 .5 per cent of global research (OIPA , 2005 . Innovation promotes more investment and thus lowers unemployment . Another factor that makes UK 's unemployment rate low is its being a leader in world trade . UK is second in the world in terms of exports and third in the world in terms of imports . The magnitude of trade is an indication that there is a corresponding high level of workforce behind this trade There are also a considerable proportion of world 's leading companies who reside in UK . These companies provide stability and maintain the employment force in UK . If assuming that UK was not a leader in exports and imports , the economic indicators showing UK as having roughly 50 exports to other European countries would have shown otherwise . Another most significant contributor that makes UK 's unemployment rate low is its low taxation compared to other European countries . The corporate tax , which is at 30 , is relatively low compared to other key European countries . The Value Added Tax (VAT ) in UK is also lower than most European countries . Lower corporate tax and lower VAT induces more investment and thus decreases unemployment rate . Let say for example we are a company from another country like Japan and we wanted to have some presence in Europe . Logically , if we have France , Spain , Italy...