M2- Analyse the effects of fiscal and monetary policies for a selected
business in terms of the market it operates in
D2- Suggest and justify elements of fiscal and monetary policies that
would help a selected business achieve its objectives
Introduction
In this task, I am going to write a report analysing the use of fiscal & monetary
policies in my selected business which is Curry’s. I am going to explain in full
depth in how fiscal & monetary policies impact on Curry’s positively & negatively.
Along with that, I am going to suggest & justify elements of fiscal & monetary
policies in how they will help Curry’s succeed as a business. I am going to explain
the impacts of government spending cuts, VATs, interest rates, & employment
levels on Curry’s. I am going to give a judgement of the impact of the
Effects of fiscal changes in Jan 2011- The fiscal policy involve government
spending, VAT and many more. In January 2011, the VAT rose from 17.5% to
20%. This will impact on the UK and the economy. The reason why the VAT rose
from 17.5% to 20% is that the government want to raise tax revenues and to cut
its high budget deficit. CPI inflation increased between 0.6%-0.8%, and
economic growth was cut between 0.5%- 0.8%. In 2012, the government
predicted that 9,800 stores will close down to the increase of the VAT. The VAT for
most goods & services is 20%. The VAT for food, children’s clothing &
educational resources, and home energy is 5% so it will not affect consumers
that much. The VAT for zero-rated services e.g. food & children’s clothes is 0%.
These benefit consumers especially the ones who have children because food &
children’s clothing will still be cheap for consumers to purchase. The rise of VAT
impacts on consumers’ disposable income because VAT payments represent
12.1% of consumers’ income. The more VAT payments consumers have to pay
the more their income will decrease. 73.3% of consumers predict that sales will
be cut due to the VAT rise and it will affect their labour force. 47,000 staff or
1.6% of the labour force would have to go.
The effect that the VAT rise will have on Curry’s is that demand will decrease.
This is done because consumers’ disposable income will decrease because of the
increase of the VAT. VAT payments represent 12.1% of consumers’ income so it
controls the prices of payments consumers have to pay. It will affect the prices
of Curry’s products also. If a Panasonic TV that Curry sells cost £399.00, due to
the rise of VAT, the price of the Panasonic TV will be £478.80. It will be harder for
consumers to purchase Curry’s luxury goods thus sales will decrease. Another
effect that the VAT rise will be that it might affect their input & output tax. The
input tax is the VAT that you pay for the goods & services you buy. The output
tax is the tax that is taken from the goods & services that you sell. If the output
tax is high than the input tax, this will mean Curry’s will have to pay the
difference to HM Revenue & Customs. If the VAT rises, this will affect the balance
of Curry’s input & output tax. Curry’s output tax will be higher than last year’s. If
Curry’s suppliers do not raise their prices, Curry’s input tax will be low. This will
be bad for Curry’s because they will be forced to pay the VAT to HMRC. Another
effect that VAT will have on Curry’s is the price of trade. If the rate of trade
decreases suppliers will raise the prices of suppliers. Another effect that the VAT
business in terms of the market it operates in
D2- Suggest and justify elements of fiscal and monetary policies that
would help a selected business achieve its objectives
Introduction
In this task, I am going to write a report analysing the use of fiscal & monetary
policies in my selected business which is Curry’s. I am going to explain in full
depth in how fiscal & monetary policies impact on Curry’s positively & negatively.
Along with that, I am going to suggest & justify elements of fiscal & monetary
policies in how they will help Curry’s succeed as a business. I am going to explain
the impacts of government spending cuts, VATs, interest rates, & employment
levels on Curry’s. I am going to give a judgement of the impact of the
Effects of fiscal changes in Jan 2011- The fiscal policy involve government
spending, VAT and many more. In January 2011, the VAT rose from 17.5% to
20%. This will impact on the UK and the economy. The reason why the VAT rose
from 17.5% to 20% is that the government want to raise tax revenues and to cut
its high budget deficit. CPI inflation increased between 0.6%-0.8%, and
economic growth was cut between 0.5%- 0.8%. In 2012, the government
predicted that 9,800 stores will close down to the increase of the VAT. The VAT for
most goods & services is 20%. The VAT for food, children’s clothing &
educational resources, and home energy is 5% so it will not affect consumers
that much. The VAT for zero-rated services e.g. food & children’s clothes is 0%.
These benefit consumers especially the ones who have children because food &
children’s clothing will still be cheap for consumers to purchase. The rise of VAT
impacts on consumers’ disposable income because VAT payments represent
12.1% of consumers’ income. The more VAT payments consumers have to pay
the more their income will decrease. 73.3% of consumers predict that sales will
be cut due to the VAT rise and it will affect their labour force. 47,000 staff or
1.6% of the labour force would have to go.
The effect that the VAT rise will have on Curry’s is that demand will decrease.
This is done because consumers’ disposable income will decrease because of the
increase of the VAT. VAT payments represent 12.1% of consumers’ income so it
controls the prices of payments consumers have to pay. It will affect the prices
of Curry’s products also. If a Panasonic TV that Curry sells cost £399.00, due to
the rise of VAT, the price of the Panasonic TV will be £478.80. It will be harder for
consumers to purchase Curry’s luxury goods thus sales will decrease. Another
effect that the VAT rise will be that it might affect their input & output tax. The
input tax is the VAT that you pay for the goods & services you buy. The output
tax is the tax that is taken from the goods & services that you sell. If the output
tax is high than the input tax, this will mean Curry’s will have to pay the
difference to HM Revenue & Customs. If the VAT rises, this will affect the balance
of Curry’s input & output tax. Curry’s output tax will be higher than last year’s. If
Curry’s suppliers do not raise their prices, Curry’s input tax will be low. This will
be bad for Curry’s because they will be forced to pay the VAT to HMRC. Another
effect that VAT will have on Curry’s is the price of trade. If the rate of trade
decreases suppliers will raise the prices of suppliers. Another effect that the VAT
