The Budget of England

The total government spending in England for 2012 has been budgeted at 703.4 billion pounds.  Like the United States, the government sets its budget before any funds are raised or spent.  Traditionally, the “mini budget” is presented to the House of Commons on a Wednesday in March the year prior to its execution.

The Chancellor of the Exchequer is the person primarily responsible for the creation of, adherence to, and execution of the Bank of England’s Budget.  The Chancellor currently is George Osbourne, and his role is similar to that of the Secretary of the Treasury in the United States.

Also like the United States, England’s Budget is the primary presentation of its Fiscal policy.  Government spending has increased significantly since the 2007-08 recession in part to attempt to boost income, investments, and overall growth of the economy.  The government has also taken on the task of funding universal healthcare.  The accounting for this government benefit, surprisingly, is taking in less than 20% of the government budget.  Defense spending (extremely un-like the United States) accounts for less than 7% of the federal budget.

I find it interesting that many of the main spending categories are used by the Bank of England seem fairly balanced to “job public” me.  I’m sure that portions of this presentation are cleverly compiled before publication to avoid political backlash that may be associated with it.

Word Count: 230

Works Cited:

http://en.wikipedia.org/wiki/Chancellor_of_the_Exchequer

http://www.ukpublicspending.co.uk/

http://www.usgovernmentspending.com/us_budget_pie_chart

The Bank of England

Similar to how the Fed is the central bank of the United States, the Bank of England is the central bank of the United Kingdom.  The goals of the Bank of England, however, differ from those of the United States.  It aims to keep inflation low, maintain trust in issued bank notes, and to promote stability in both the markets and the economy of the United Kingdom.

In a previous post, I’ve discussed the tools that the Bank of England utilizes to keep inflation as close as possible  to 2%.   The reason this low inflation rate is desirable to the Bank of England is because it protects the value of money that would otherwise be eroded by inflation.  I believe the 2% rate is not high enough, however, for the economy of England to grow.

The low inflation rate is likely because the Bank of England believes that stability is more important then a sustainable and low rate of growth in the economy.  They utilize regulation and policies to maintain a stable market.  They assess weak spots of the economy and attempt to reduce the impact of them in order to make sure the problems of one financial institution do not affect the economy as a whole.

Control over the United Kingdom’s money supply.  Ensuring that the money supply maintains its value and trust, different methods are used by the Bank.  Bank notes are only valuable because of the trust that they can be used to pay for goods and services.  Each note issued by the bank has raised printing, watermarks, metallic threads, and holograms to make sure the notes are legitimate.

Word Count: 272

Works Cited: http://www.bankofengland.co.uk/about/pdfs/whatthebankdoes1.pdf

Week 6: Who to Hire?

There is an interesting trend occurring in the English job market as firms are more often hiring workers who are NOT British.  This week, Iain Duncan, the Secretary of Work and Pensions, announced that measures were being taken to help promote businesses to hire European Union workers over non-European Union workers.  There have recently been cuts in Government spending, which is leaving the majority of open jobs to be filled in the private sector of England’s economy.

The private sector’s main argument against government regulation of their hiring practices is that the EU workers available for employment are not as qualified or hard working as some non-EU workers.  Firms’ general opinions are that migrants have a better work ethic as well as better training for the available jobs.

The government, however, argues that by not filling British jobs with British workers does not allow them to develop critical skills necessary for future economic growth.  The Secretary of Work and Pensions also points out that while not all EU workers are qualified to fill all positions, many positions are entry level and should be filled by British citizens.

As of recently, the government has placed a cap on the number of non-EU workers that private businesses are allowed to hire.  It is the government’s hope that the number of jobs filled will be met by British workers first, but also maintaining the liberty of private business decisions.  It should be noted that England does have laws to prevent discrimination of laborers based on their nationality, so there is a fine line to balance.

Word Count: 262

References:

http://www.bbc.co.uk/news/uk-politics-13984512

A Pence and a Pound

The history of the money system used in England can be divided into two periods; before and after Decimal Day (1971).  Each period’s currency was accepted as a means for trade, durable, and portable.  The main difference between them was in the divisibility of the money.

Before Decimal Day in 1971, the British Pound originated from the value of one pound of sterling silver.  The silver penny, or pence, was also set so that the weight of 240 pence is one sterling pound.  There were 20 shillings to a pound, and 12 pence to a shilling.  Here is some common slang used to describe currency before Decimal Day (http://www.learnenglish.de/culture/britishmoney.htm):

Farthing = copper coin value 1/4 penny
Ha'penny = copper coin value 1/2 penny
Penny = copper coin, one of the basic units = 1d
Thrupenny bit = brass coloured twelve sided coin value three pence = 3d (thrupence) 
Sixpence (tanner) = silver coin value six pence = 6d
Shilling (bob) = silver coin second basic unit, value 12 pence =1/- 
Florin (two bob) = silver coin value two shillings = 2/-
Half-crown (half a dollar) = silver coin value two shillings and six pence = 2/6d
Ten shillings (ten bob) = banknote value 10 shillings = 10/-
Pound (quid) = third basic unit, banknote value 20 shillings or 240 pence = £1
Five pounds (fiver) = banknote value five pounds = £5

After Decimal day, the value of the penny was set to be 100 pence to a pound (similar to the penny used in American currency).  This effectively increased the value of a penny and made the pound divisible in a more standard way for global trade.  Coins now are available in 1 pence, 2 pence, 5 Pence, 10 Pence, 20 Pence, 50 Pence, One Pound (Quid) and Two pounds (two quid).  Paper money (notes) is issued in denominations of 5, 10, 20 and 50.  At this time, England does not have a 100 note.  Here is some common slang used to describe currency after Decimal Day – you may notice a lot of it is similar to pre-Decimal day (http://www.learnenglish.de/culture/britishmoney.htm)

Nicker or quid=	£1
Lady=	£5 (fiver).
Tenner=	£10
Score=	£20
Pony=	£25
Ton=	£100
Monkey=	£500
Grand=	£1000

Word Count: 226

Works Referenced:

http://www.learnenglish.de/culture/britishmoney.htm

http://www.lonympics.co.uk/new/1009.htm

http://en.wikipedia.org/wiki/Pound_sterling

Unemployment in England

There has recently been a rapid decline in the unemployment rate for the United Kingdom during the last quarter this year.  About 88,000 people are now employed that were previously unemployed.  It has not fallen this sharply since the first quarter of 2000.

Most of the new jobs have been created in the private sector, as the public sector (government) begins to cut jobs and reign-in spending.  Almost 90% of the unemployment rate decline can be attributed to young adults (16-24 years old), bringing their numbers down to a two-year low.

In addition, the number of people claiming Jobseeker's Allowance (JSA) has risen by 19,600 people during the same quarter; this is the highest amount of new claimants in over a year.  Interestingly, the majority of the new JSA claimants have been men (11,500 of them).

So, breaking it down, the current available jobs are being filled at a quick pace, and more people are applying for benefits.  It would stand to reason, then that the job market is "drying up" and more people are looking for work than there is available.  However, recently there have been changes in the benefits and qualifications for Jobseeker's Allowance, so it is unlikely that the two (decrease in unemployment and increase in JSA Enrollment) are as related as they might seem.

Word Count: 218

Works Cited:

http://www.independent.co.uk/news/uk/home-news/uk-unemployment-total-falls-by-88000-2297636.html

http://www.bbc.co.uk/news/10604117

http://www.newcastle.gov.uk/core.nsf/a/wr_bench2011

Week 3: The 2% Goal

Inflation, the sustained rise in the average level of prices, is a natural and necessary part of every economy (Boyes and Melvin).  The amount of money in circulation within an economy has a direct relationship to the inflation rate.  Too much money in circulation results in a higher inflation rate, and too little results in a lower one.  It stands to reason, then, that there is a level of inflation that is the most conducive towards promoting a healthy economy.  England has decided a 2% inflation rate is ideal to keep the supply of money on par with the growth in the economy.

There are a couple of tools that the Bank of England uses to help steer their economy towards a 2% rate of inflation.  The first step the Bank takes is to raise or lower interest rates.  If inflation is expected to be higher than 2%, interest rates will be raised.  This in turn makes borrowing less attractive, saving more attractive, and lowers the amount of money in circulation.  Eventually, this will lower the level of inflation.  The opposite is done if inflation is not expected to reach the 2% target.

The second tool used by the Bank of England is used when the interest rate cannot be lowered any more.  Since the goal of a lower interest rate is to promote borrowing and spending, and make saving less attractive, the Bank can inject money directly into the economy; this is called Quantitative Easement (Quantitative Easing Explained).  No new bank notes are printed in the Quantitative Easement process; the Bank simply buys stocks and government bonds and puts cash directly into the economy.

Through monitoring and constant fluctuation, the Bank of England uses the interest rate and quantitative easement to push England’s economy towards a 2% rate of inflation annually.

Word Count: 299

Works Cited:

Boyes, William, and Michael Melvin. Macroeconomics. 7. Canada: SouthWestern Cenage Learning, 2008. eBook.

England. Quantitative Easing Explained.

"Bank of England." The Bank of England, n.d. Web. 8 Jun 2011. <http://www.bankofengland.co.uk/monetarypolicy/framework.htm>

Week 2: Quidditch

The sport of Quidditch was initially developed by J.K. Rowling in her Harry Potter books, which is set in England.  It has since become and actual sport (an adaptation or course) that has international leagues and a World Cup Tournament.  Quidditch has the capacity to attract lots of people, beginning locally where the events take place, and eventually from further away.  These fans tended to be willing to purchase goods and services that are offered at the sporting events.

The equipment used in Quidditch is fairly straight forward.  The seven players on each team fly (or run if in the adapted-for-humans game) around on broomsticks, and score points using different balls.  There are three types of balls used, a quaffle for scoring, two bludgers for knocking players from broomsticks, and the all-important golden snitch.  The snitch is very special, and is traced by the seeker of each team.  The game cannot end until it is caught, and the seeker who catches it first scores 150 points for their team.

While the quaffle and bludgers can be reused game after game (unless bewitched of course), the golden snitch must be replaced every game because it has skin memory to avoid confusion on who ACTUALLY catches the furiously fast flying thing first. Speed, cunning, and gall are very important on the Quidditch field if you anticipate winning – and better brooms (read: running shoes for muggles) go faster and are more controlled.  There is no substitute for a proper broom (or shoes), and people pay very high prices for the most exclusive and best available products.

But what happens if a player falls from their broom, or is savagely beaten by a bludger?  There are highly skilled laborers to help, of course!  Doctors, nurses, paramedics, and heavy lifters are always on standby at the field in case an accident occurs.  Typically speaking, although Quidditch is safe enough, they are usually busy after a game patching up the players’ scrapes and bumps.  There are balls in the game, the bludgers, which are specifically designed to hurt the players after all.  The continued employment of laborers can only be anticipated as Quidditch begins to grow in popularity and as technology increases the speed players can fly, and the brutality they can bestow upon their rival teams.

With the continued growth in popularity that Quidditch is providing, there is also a continued rise in the wages players are paid.  That money is then invested back into the English economy by means of larger houses for athletes, better sporting equipment, etc.  Since England started the sport, their equipment is better made, their laborers more trained in what to do – the goods and services can begin to be exported and trading established for other goods and services.

So, whether fictional or real, Quidditch has helped generate new sports related goods and services jobs, and grown the overall English economy.  It is kind of amazing to think several markets have been created from a fictional story.

Word Count: 497