FREE ESSAY ON BRITISH ECONOMIC PROBLEMS

BRITISH ECONOMIC PROBLEMS

British Economic Problems
From my research, Britain appears to be in a harsh time economically but it seems like
they are headed for a rise in the near future. Although earnings growth is down and there
is a prediction for recession in Britain, the inflation rate is low and the Nissan Motor
Company has just unveiled a major project to be carried out in London, which will bring
in large sums of money definitely boosting the economy. There is still much uncertainty
about Britain's economy in the future, with evidence to support either a recession or a
booming economy ahead.
In July of 2000, there was a fall in the rate of earnings growth for the third month in a
row from 5.1 percent to 4.6 percent lowering the expected interest rates. Earnings growth
rates are now approximately 4.5 percent indicating low inflation. In May, the earnings
growth rate dropped from 4.6 percent to an unbelievable 4 percent, the lowest recorded
rate since September of 1997. 
A recession has been predicted for the British in the near future by a very unusual
method. This method is neither scientifically proven nor accurate by any means but over
the years it has proven to be successful in results. The technique is called the R-count.
Using a computer database, it counts how many times the word recession is used in the
major newspapers in the country being studied. As the number of stories in the newspapers
using the word recession began to accumulate, Britain entered a recession (1990). Again
it happened in 1998 when production fell and the Gross Domestic Product went down. This
was not only working in Britain, it was used in the United States (U.S.) also and
accurately predicted the beginning of the recession in 1981 and 1990. It did have one
false alarm in the U.S in the early 1990's but regardless, that is still a very good
track record. Was this just coincidence or are we onto something here? The word recession
in the media today seems to be an economic indicator. What is alarming for the British is
that it has been on the rise for the past 20 years, while preceding years have signaled a
recession. Let us hope that this was merely a coincidence otherwise, Britain is in for a
rough time.
On the other hand, there is some hope for the British economic future. The Nissan Motor
Company has announced their new investment in the largest automotive assembly line in
Britain. On Thursday, January 26, 2001 the Nissan president, Carlos Ghosn announced that
his company would produce its new Micra model at its Sunderland car plant in England. "I
am very glad today to announce that Nissan has decided to invest 235 million pounds to
assemble the new Micra in our manufacturing plant in Sunderland," said Mr. Ghosn standing
next to Prime Minister Tony Blair in London. Nissan expects to begin production on the
new model in December of next year with an increase in production of approximately 44%.
Now, the work force at the Sunderland plant will have to increase from 4,500 to 5,000
rather than the loss of 1,250 if the project had gone elsewhere. This project will take
from 5-10 expected years to complete, which will be very good for the economy, bringing
in money itself while also keeping the money in the country by increasing the number of
employees. Another plus for the British economy is Nissan's decision to buy 65% of the
means of production from British suppliers rather than the intended 20%-25%. With this
new big business booming and the small businesses supplying it, it is obvious that these
are the key ingredients in a truly healthy economic society.
I understand that Britain has had its ups and downs economically, just like every other
country in the world. It is hard to try and predict what will happen in the future but
with the given information, one would tend to believe that Britain is on the uprising.
The strongest argument for this idea is Nissan's intrusion into the mix of things. This
decision by Nissan to produce a new car in one of England's existing plants is very good
news for the suffering English car industry. Based on this fact alone, it is my belief
that the British economy will grow and expand for at least the next 10 to 15 years.