Question

With the UK, what are the most commonly traded financial markets and their importance to the economy. Include a brief overview of the current economic position, the balance of trade and the role of the central bank.

Answer 1

In United Kingdom,commonly traded financial markets are for various stocks,commodities,currencies,derivatives is through London Stock Exchange and Alternative investment market,now coming to importance of these markets,most of the companies are traded on these contributing to ffunds and value for these companies through which they essientially survive and expand.These financial markets actively contibute to economy and GDP of nation also providing investment opportunities to investors,importantly foreign investors which provide a way for growth for domestic economy.Coming to current economic situation for UK,just like other countries it is hit,in a way more severely by Covid pandemic hurting the economy,with economy expected to recover slowly,there was an increase in food services but overall recent growth was just 2.1% in August which showed slow recovery,with another Lockdown looking likely to contain surge in cases,we may continue seeing uncertainity in economy leading to decline or no growth in coming months.,UK balance of payments also shrank in terms of trade surplus with high increase in imports huring,it shrank to GBP 1.3 Billion in August signalling decreasing surplus.Central banks as we know that around world play an important role in dealing with inflation,giving boost to economy,their role has been ever important in this pandemic with Central bank of UK cutting interest rates,providing cash with help of government to stabilize small businesses as well as facilitating other banks' expansion of lending,in a way its onus is to provide faster and more liquidity so economy does not step into recession and recovery is faster with lesser and lesser impact owing to pandemic financially.