How Primark's Monetary and Fiscal Policy Changes Impacted

Introduction

Monetary and fiscal policy changes can have a huge effect on the most companies operating inside of the country, the company that I am choosing to evaluate the changes made by fiscal and monetary changes is Primark. The effect of the changes which made to the fiscal and monetary policy’s affecting varies greatly on the economic or activity inside of the country. For example any changes now in monetary or fiscal policy would have a huge effect on the country due to the fact the pound is at an all-time low. Therefore most companies currently have to plan for the future and this may mean cutting down on jobs. This is why economists have to be careful when choosing to use a fiscal or monetary policy as the well-being and stability of the company’s rest on that decision.

Fiscal Policy

A fiscal policy is a way the government can see the countries spending and use this spending to channel it to investment in the country as well as taxation. The main expenditure for a country such as the United Kingdom is through different types of benefits.

• Pensions- This is the number one cost for tax payers as over 30 percent of peoples taxes go to funding the wellbeing on the elderly. Especially as nearly every pensioner receives sum sort of subsidy from the government.
• Health / Emergency Services- this is the services that include the NHS as well as the police and ambulance services which will come to the aid of any person who is currently in the UK free of charge.
• Education- There is free schooling to any UK residents between the ages of there to 18 years of age.
• Transport- Many different types of people receive free transport or the transport is subsidized so that they can afford the costs.

Investments that the government make such as the ones previously mentioned above have a drastic effect over a company in many ways the first of all being if the government wasn’t to pay through the NHS and did not provide free healthcare, then it was full to the responsibility of the employer in this case Primark to make sure that all of its workers are in full working order and if any employee was to fall ill come to the responsibility to make sure that primark pays for the medical bills if the government were to stop providing free healthcare UK citizens of this would cost the company is huge about some money as they would have to make sure that all of their employees had health insurance.

Another way that fiscal policy affects a company such as Primark is in transport this is because if the government was to stop subsidizing transport and making it affordable for people then people would not be able to travel into the city for an affordable price to go to work this means that people would have to work very close to where they live and this may mean there’s a shortage of jobs. This means the prime arc may have to pay for peoples transport to work as they’re simply not being paid enough to justify the trip. This is because prime I do not have a huge amount of stores however the stores they do have require a huge amount of staffing and this means that people travel from long distances to go to work.

The two main areas of fiscal policy is an investment which we’ve already covered as well as taxation. There is two different types of taxation indirect and direct. Direct tax is the money that is taken from a persons income and wealth and paid directly to the government for the most part if you are not self-employed this tax is automatically taken from your pay cheque however for a company such as primark is up to them to show the government how much they owe them this tax which is paid is usually call corporation tax and it is a direct tax. Indirect taxes referred to as tax which is paid on goods and services such as VAT. However with the company such as prime mark the majority of the indirect tax that they will pay will be import tax as the majority their clothing is not made in the UK and therefore has to be bought in through shipping.

Monetary Policy

The monetary policy depends on the country in the way it is implemented four example in the UK we have the Bank of England which sets the interest rates as well as allowing people to borrow from their banks, however in the United States they had the Federal reserve bank which also circulates money throughout the United States. However pry mark doesn’t fighting United States for you Banks circulation we are interested in is the Bank of England.

One of the most important decisions through companies such as prime mark is where to invest money, if the monetary policy is put into affect they need to make sure that they are checking the interest rates there been set by the Bank of England this is because if the interest rates are very low there is no point in saving money and therefore they need to think about investing in the future.

This is because with a company that operates with the millions and millions of pounds if the interest rate is only 0 .1% it doesn’t make a lot of sense for them to put their money aside is it will be gaining any more revenue from it. And with companies such as prime mark they are always looking to increase their profits and therefore money sitting in the bank not gaining any money is not worth their time or investment. They’ll says take into consideration inflation as this will have a huge effect on their profits as they need to make sure that they’re charging the right amount of money for their products.

This is because prime cooperate on making sure that their products are low-cost unaffordable however they need to make sure that they are still generating big enough profit to continue operation. They’ll send me to make sure that they are ready there any sort anticipated changes that could happen in the future for example new laws coming in about child labor as well as people investigating them the not using the proper work condition laws this could cost them huge amount of reparations that they may have to pay in the future and this is something that they need to be prepared for.