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In my previous articles on the economy, I investigated how the markets were shaken by inflation and fear, whilst the GBP suffered from a loss of confidence by money market traders. In this, the final article of The Economy series, I will explain what the government is doing to tackle the economic issues affecting the eUK, and will say what they should be doing in order to sustain our future prosperity.

Government Policy
Understandably, the government's recent efforts have been more concentrated on the conflict with France than the economic consequences of it, however it is important to remember that the economy is in effect the engine for the whole war. If it was to collapse, so would our war effort. Whilst there are no signs that the economy is in quite that bad a shape, there is growing frustration, especially amongst newer citizens, that the government isn't doing enough. Indeed, one of the biggest changes of economic policy in recent months has been directed at anything other than the economy. This being, of course, the war.

Whilst the war has, however, had a negative impact on the economy as a whole in the here and now, its future impact will be mostly positive. Food prices are already beginning to settle down, and though the currency is not back to its past levels of value, it is highly likely that once the war ceases the GBP will gain back its value. The main reason being a simple one. Resources. Iron was, until last week, a resource the eUK simply did not, to anyones knowledge, posess. Now the eUK has secured iron reserves of its own, meaning that in the future, we will be far less reliant on imports.

After the war, however, things will settle back to roughly how they used to be, and this is where we run into problems. Prior to the war, companies were not iable to compete effectively over price, they were struggling to survive, with some forgoing profit in order to merely continue existance. There were many businesses on the brink of failure, and just as the guns will fall silent, many production lines may too. This is where the government will need to intervene. There are businesses in the eUK that are too big to fail, and there are businesses that are too great in number to fail. That is, small business failures en masse could devastate the eUK's economy, and destroy future growth prospects.

It is here that government intervention may well be needed. Low, or even interest free loans may well have to be given to companies, in order to recapitalise them. In the lack of many viable commercial banks, the government will have to step in. The problem for the government may well be that the businesses could end up defaulting on repayments, or fail anyway. This is not neccesarily going to happen, as whilst some businesses will require some government recapitalisation, not all will. There were some companies which were able to operate quite effectively, making reasonable profits. Indeed, had it not been for the war, prices may have crept up, but overall most businesses would not be in truly terrible shape.

There is one requirement that may well grow greater, however. The requirement for commercial banks. Currently there is only one operating commercial bank in existance, the Bank of Newcastle, and although there have been plans to found another, it was more of an investment vehicle than a true bank. Banks, in this sense, will not necesarily need to hold cash deposits, but will more likely be required for the purposes of lending. Indeed, Banks could be very profitable enterprises potentially more so from lending than from money exchanges. The only problem with Banks is that though regulation may be neccessary, taking any actions if Banks act irresponsibly would be impossible. Government guarantees to citizens or banks themselves may well serve to only further irresponsibility amongst lenders.

Desite this, however, from a purely economic point of view the mid to long term looks rather dull. Deflation is likely to be cyclical, getting gradually better before getting worse again, whilst overproduction is likely to come back into the economy. Taxes are likely to increase in at least the short to mid term to cover spending on the war, whilst the government may resort to issuing money in an effort to control deflation, despite the cost of issuing currency. Imports are likely to go down as overproduction takes its toll, whilst exports are likely to increase. Overall then, it looks as though after the war has ended, the economy and business in general will return to the way it all was before the war began, leading to a very dull time for economists.

Whilst the laws of supply and demand will still be in force, prices are not likely to go down. Despite the increase in supply, there will also always continue to be an increase in demand, mainly due to both new citizens and demand in foreign markets. As population growth appears to be slowing, lower Q food prices may decrease, although very slowly, whilst Q2-Q3 food may well increase in price slowly. As more and more new players struggle with wellness, however, gifts will continue to increase in price as the NHS buys up more and more. Imports may play a larger role in this market as there is less supply from eUK companies. The GBP will most likely become more and more stable in the money markets, too, as the Bank of England resumes guiding the exchange rates.

Overall, then, the future looks fairly positive. Whilst the government may need to keep deflation in check and maintain the liquidity of companies, the future does not look to bad for the eUK. Whilst the economy will always have its little flaws, they will gradually be dealt with, not neccesarily by the government, but by us as individuals and by use of our own individual enterprising minds. One thing is certain, no matter what happens, the eUK has a good team of people who will be able to sort out the problems with The Economy.

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After a break to make way for The Economy series, The Daily Independent will resume publishing of its regular articles. You can now get The Economy series as an ebook in PDF format from the following link:
The_Economy_Ebook.pdf (PDF, 16K😎