Speaking

1.Read the following quotations about the economy and explain in your own words what you think the authors meant. Say whether you agree or disagree with them and give your arguments.

1) In the new economy, information, education, and motivation are everything (Bill Clinton).

2) If we only have great companies, we will merely have a prosperous society, not a great one. Economic growth and power are the means, not the definition, of a great nation (Jim Collins).

3) Education is both a tool of social justice as well as a fundamental driver of economic development (Kevin Rud).

4) Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it (Ronald Reagan).

5) In the end it may well be that Britain will be honoured by historians more for the way she disposed of an empire than for the way in which she acquired it (Lord Harlech).

WRITING

Write an essay of at least 500 words making a forecast of the nearest economic trends in the UK.

SUPPLEMENTARY READING

Text 1

The economic geography of the UK reflects not only its current position in the global economy, but its long history both as a trading nation and an imperial power.

The UK led the industrial revolution and its highly urban character is a legacy of this, with all its major cities being current or former centers of all forms of manufacturing. However, this in turn was built on its exploitation of natural resources, especially coal and iron ore.

The UK's primary industry was once dominated by the coal industry, heavily concentrated in the north, the Midlands and south Wales. This is all but gone and the major primary industry is North Sea oil. Its activity is concentrated on the UK Continental Shelf to the north-east of Scotland.

The UK's heavy manufacturing drove the industrial revolution. A map of the major UK cities gives a good picture of where this activity occurred, in particular Belfast, Birmingham, Glasgow, Liverpool, London, Manchester, Newcastle, Nottingham.

Today there is no heavy manufacturing industry in which UK-based firms can be considered world leaders. However, the Midlands in particular remains a strong manufacturing centre.

More recently, high technology firms have concentrated largely along the M4 motorway, partly because of access to Heathrow Airport, but also because of agglomeration economies.

Finance and services. Once, every large city had a stock exchange. Now, the UK financial industry is concentrated overwhelmingly in the City of London and Canary Wharf, with back office and administrative operations often dispersed around the south of England. London is one of the world's greatest financial centers and is usually referred to as a world city.

Regional disparity. The combined effect of changing economic fortune has created the so-called North-South divide, in which decaying industrial areas of the north of England contrast with the wealthy, finance and technology led southern economy. This has led successive governments to develop regional policy to try to rectify the imbalance.

Text 2

James Gordon Brown (born 20 February 1951) is the Prime Minister of the United Kingdom and Leader of the Labour Party. Brown became Prime Minister in June 2007, after the resignation of Tony Blair and three days after becoming leader of the governing Labour Party. Immediately before this he had served as Chancellor of the Exchequer in the Labour government from 1997 to 2007 under Tony Blair.

Brown has a PhD in history from the University of Edinburgh and spent his early career working as a television journalist. He has been a Member of Parliament since 1983. As Prime Minister, he also holds the offices of First Lord of the Treasury and the Minister for the Civil Service.

Brown's time as Chancellor was marked by major reform of Britain's monetary and fiscal policy architecture, transferring interest rate setting powers to the Bank of England, by a wide extension of the powers of the Treasury to cover much domestic policy and by transferring responsibility for banking supervision to the Financial Services Authority. Controversial moves included the abolition of Advance Corporation Tax (ACT) relief in his first budget, and the removal in his final budget of the 10 per cent " starting rate" of personal income tax which he had introduced in 1999.

After an initial rise in opinion polls, Brown's time as Prime Minister has seen his approval ratings fall and the Labour Party suffer its worst local election results in 40 years. Despite public and parliamentary pressure on his leadership, he remains leader of the Labour Party.

Text 3

Will Great Britain Join The Euro?

Twelve of the fifteen EU members joined the Eurozone and adopted the Euro as their only currency from January 1st 2002. Only Great Britain, Denmark and Sweden have not joined. As the Euro has launched successfully, it is only a matter of time before the other three countries join.

Will The Euro be Successful?

The Euro is already in use for non-cash transactions within all the Eurozone countries. Even in the three non-zone countries it is possible to have a bank account in Euros, and this helps many larger businesses to manage their currencies and foreign exchange transactions more efficiently. The Euro is already being used successfully, and has been for a few years. There are still many critics who have pointed to the fall in value of the Euro, but most world currencies fluctuate quite considerably, perhaps alarmingly, and this does not mean they are unsuccessful. The pound sterling for example has fluctuated between about $1.06 and $2.60 in the past few decades. The mighty dollar has fallen to one eighth of its previous value in just over 30 years. We believe that the Euro will work successfully when introduced for cash transactions. Obviously there will be some teething problems and these will be much publicised and ridiculed by the media.

Should Great Britain Join The Euro?

Providing that the Euro does complete its launch successfully, it is difficult to see how the UK can afford to remain outside the Euro economically and politically. It will risk being marginalised in the EU if it fails to join within a few years. At present the public opinion in the UK is against joining the Euro, and for keeping the pound. This is entirely natural and understandable. Almost all change is resisted for various reasons, mainly psychological. Fear of the unknown, laziness in trying to avoid the extra the adaptation will require. Other European countries have overcome their inertia and fear, and it may be asked why Britain should be a special case. The fact that the UK is an island adds to the natural reserve of its inhabitants. The British rarely bother to learn other languages, and cross national borders less frequently than their mainland counterparts. Another reason for greater inertia is that the British have had their own currency for much longer than many other European nations, and been invaded and conquered less frequently and less recently.

When Will Great Britain Join The Euro?

Obviously nobody knows the answer to this, even Gordon Brown probably doesn't know yet. It would also be impossible at this late stage to join at the start, particularly as most Europeans have had Euro bank accounts and invoicing for some years already. We simply could not mint the quantity of coins, or print the number of banknotes required in sufficient time. As we have already missed the start, we may as well stand back and watch. If the Euro launch is a disaster, the UK politicians will be able to appear ultra-smart by having avoided the debacle. Once the Euro is firmly established, many Britons will increasingly be able to see its advantages, and their political opinions will change. Currently about 70% of the UK population are against the Euro, we believe this will drop to under 50% within about 12 months of the Euro's full launch. It may be relatively trivial considerations which alter the public perception, for example when Britons realize that they only need one currency for a European holiday, and that they don't have to lose 5% in foreign exchange charges every holiday, that they can keep their French Euros when they go on a Spanish holiday, they will start to envy the other Europeans who can just use their own money in any other Eurozone country. Another factor will be when the pound suffers its next cyclical downturn, and the British realize that one large currency can be more robust than a large number of minor ones.

December 1st, 2008

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