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Recession Looms in the Horizon

The economic conditions in Europe and the world at large are not impressive. Most governments have put in various measures aimed at jumpstarting the economy. The United Kingdom has not been spared, since 2008; UK has been experiencing slow economic growth in most of its sectors. This situation has resulted to loss of employment and subsequently, loss of sources of livelihood to a noticeable portion of the population. Through its “The World Tonight” program, the BBC featured several economic experts and representatives of the Organization of economic corporation and development. In his submission, the OECD representative said that UK is not yet out of the woods. He went on to say that UK economic recovery did not achieve any attraction in 2011. Available data indicates that Britain’s economy grew by a mare 0.8% in 2011. According to the organization of economic corporation, the euro-zone crisis coupled by poor global investment climate are likely to prolong recession in United Kingdom. Median projections predict that Britain’s economy will shrink by 1%. The BBC program did compare various approaches being taken by the Scottish government and North East England to combat recession.

State Of Affairs in Northeast of England and Scotland

North East England is the region that was badly hit by the recession. The region has 11% percent unemployment rate with hundreds of people losing jobs every day. Most businesses in the region have closed down or have downsized in order to cope the recession. Authorities in north East England have embarked on a very aggressive campaign aimed at ignite economic growth and creating employment opportunities. North East England’s main focus is to create conditions that would encourage foreign and domestic investment. Even, though, most people in the region are pessimistic about the measures being undertaken, authorities are sure that their efforts will lead to increased investments in the region and thereby creating employment to thousands of unemployed people. Just a few miles from North East England lies Scotland. Unlike like most regions in the United Kingdom, the scourge of recession is not strong in Scotland. According to experts, Scotland has the list unemployment rate in the United Kingdom. Scottish authorities attribute this to increased foreign investment in the region (Oxlade, 2012). Experts also attribute Scottish success to the devolved system of government. Scotland is a semi autonomous region and, therefore, most of its functions do not need to get approval from the west minister government. Through its Scottish investment agency, the government has channeled millions of state funds into programs that are aimed at attracting foreign investment. As a result, numerous international corporations have managed to setup manufacturing plants in the region, thus creating employment opportunities for the people.

Adam Smith’s and Michael Porter’s Theories

Veteran economist Adam Smith and his counterpart Michael Porter advocate for lessez fare in the management of local resources. Renowned economist Adam Smith emphasized on the need for local participation in the management of their economic affairs. Porter, on the other hand, emphasized on the creation of clusters in modern economies. “Clusters are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more economically advanced nations” As heighted in the BBC program “ ( porter, 1998, p. 18).The World Tonight” both the Scottish and northeast authorities have taken bold steps aimed at jumpstarting their economies. The Scottish government was the first to ratify radical measures that promoted local and foreign investment. Immediately after the 2008 recession, the Scottish government promulgated measures that aimed attracting the region to investors. The government created an investment agency that was tasked with the responsibility of enacting measures that would spur investment in the region. Adam smith was an ardent advocate of free and liberalized markets that operate with little government interference. Critics accused him of advocating for individualism, but Adam argued that rational-self interest leads economic development. He proposed for an economic modal that favored a bottom-up approach in economic development. This modal meant that people on the ground should be given the mandate to draw up policies that would to creation of jobs and investment in general. Michael Porter, on the other hand, advocated for the creation of a business and industry framework that would determine five forces that determine competitive intensity. In his opinion, such forces would make the market attractive and, thus, attract investors in the long run  (Smith, 2009).

Analysis of Government’s Efforts in Northeast England and Scotland

Authorities in Northeast England and Scotland have made frantic efforts in an attempt to jumpstart the economy. The government of Scotland has been successful in enacting economic policies aimed at bolstering investment in the region. Just as advocated in the theory of Adam Smith, Scottish government cut itself from the rest of the united kingdom by creating polices that were unique to its situation. The Scottish government was extremely innovative in combating the economic recession. Adam says “Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view” (Smith, 1972, p. 39). Based on this analogy, the government in collaboration with local and international investors drafted and implemented measures that sparked investments in the region. Authorities identified and eradicated factors that were hindering investments in the region. In a bid to bolster investor and lure foreign investment, the Scottish government created a kit through, which farms could draw funds to invest in the area. Porter states that “Competition in today’s economy is far more dynamic. Companies can mitigate many input-cost disadvantages through global sourcing, rendering the old notion of comparative advantage less relevant. Instead, competitive advantage rests on making more productive use of inputs, which requires continual innovation” (porter, 1998, p. 32-34). In his thinking, porter stressed the need for innovative solutions and reintegration in business.

This move saw international firms like Amazon launch their operations in Scotland. The move has seen Scotland grow investment by a significant margin and, at the same time, create employment opportunities to thousands of people. Northeast England, on the other, is still crumpling with the effects of the United Kingdoms recession. Lately, the government has embarked on the enactment of policies that are aimed at reducing unemployment in the region. As noted earlier, northeast England is the worst hit region in the United Kingdom. The region has the highest number of unemployed people with thousands loosing their jobs yearly. Adam smith would advice the government to collaborate with investors and experts to initiate programs that would spur economic growth. If he was to testify before the parliament, smith would say that Since Northeast England’s main problem is over reliance on public sector jobs, the governments should establish a robust informal sector that would absorb many people in employment. Michael Porter would use the example of Scotland to call on the entire UK to improve conditions in the investment sector. This can be easily achieved through removal of extra tariffs and other red tape measures that discourage and make investment less lucrative in their regions. Such a move would make investment a lucrative venture and thereby creating employment opportunities (Oxlade, 2012).


The United Kingdom and the entire European Union have been experiencing economic problems since 2008. Economic experts have been calling on EU government to radically change their investment policies and tame the financial services sector. According to some economic experts, unparallel autonomy in the banking sector coupled with globalization are the major cause of recession in the world. The BBC interactive program “The World Tonight” featured experts opinions on how various United Kingdom governments are responding to the effects of the recession, especially, the question of unemployment. The program juxtaposed the measures taken by Scotland and Northeast England in combating unemployment and attracting investors. Just as advocated in the Adams Smith’s theory of optimal development of national economies, Scotland seems to have realized the importance of this analogy earlier than northeast England. The policy of making investments lucrative has led to massive investments in Scotland and created job opportunities for thousands of people.

Economic Gap Monetary Policy
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