Mix of the UK Economy

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Mix of the UK Economy

The UK economy combines factors of both a free market economy and one

which is fully planned. This brings both advantages and disadvantages

as it limits the power of market forces, but on the other hand

restricts the influence the government has over supply and demand.

Since the 1980s the government in the UK has steadily reduced its

involvement in the economic system. This has been done through

privatisation, which means handing over control of services to private

companies and investors, for example British Gas or Railtrack.

A free market economy revolves around the central concept of supply

and demand. Consumers make individual decisions about purchases for

their own self-interest whilst producers aim to make the largest

profits by supplying exactly what the consumers desire. Resources are

not allocated by the government or any state organisation but via the

price mechanism. This means that the producers determine the supply

and the consumers determine the demand, the combination of these two

factors determines the price of a product.

A key feature of a market economy is the freedom of choice and

enterprise. This means that producers are free to obtain economic

resources for use in production and are then able to sell their

product in whichever way they choose. These people are known as

entrepreneurs and are only seen in a market economy. Another major

difference between free market and planned economies is the principle

of self-interest. The idea of capitalism is that individuals are free

to act as they wish and this translates into the concept of an entire

economy being built around the idea of self-...

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... economy than a planned one, but the mix between the two is still

fairly equal. Many privatisations have been a success, such as British

Telecom, British Gas, and have provided the same service as a

nationalised company whilst remaining competitive. However, others

such as the privatisation of the UK's rail network have no been so

successful and many people yearn for a return to state control.

Personally, I feel that the mix between market and planned economies

in the UK is about right, although there are some services such as the

aforementioned rail network which I believe may be better run in the

hands of the government. On the other hand, if privatisation reduces

taxes and enable the government to concentrate on more essential

services such as health and education, then privatisation may be the

way forward.
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