INTERNATIONAL FINANCIAL MANAGEMENT

International Financial Management



International Financial Management

Introduction

In this paper the two countries we going to analyze is are UK and US and all the revlant information needed to be done will be analyzed.

Economy of the United Kingdom

The economy of the United Kingdom is the sixth-largest national economy in the world measured by nominal GDP and seventh for purchasing power parity (PPP) and the third-largest in Europe measured by nominal GDP (after Germany and France) and second-largest measured by PPP (after Germany). The UK's GDP per capita is the 20th highest in the world in nominal terms and the 17th highest measured by PPP. The British economy comprises (in descending order of size) the economies of England, Scotland, Wales and Northern Ireland (Berg, Maxine, 2004).

History

The UK economy had been one of the strongest EU economies in terms of inflation, interest rates and unemployment, all of which remained relatively low until the 2008-09 recessions. Unemployment has since reached a peak of just under 2.5 million (7.8%), the highest level since early 1990s, although still far lower than some other European nations. However, interest rates have been slashed to 0.5%. During August 2008 the IMF warned that the UK economic outlook had worsened due to a twin shock: financial turmoil as well as rising commodity prices.

Macroeconomic trend

GDP per capita big four Western Europe

This is a table of the trend of gross domestic product of United Kingdom at market prices estimated by the International Monetary Fund with figures in millions of pounds sterling. (See Appendix 2)

Financial and business services

This industry added gross value of £86,145 million to the UK economy in 2004. The UK's exports of financial and business services make a significant positive contribution towards the country's balance of payments.

London is a major centre for international business and commerce and is one of the three "command centers" of the global economy (alongside New York City and Tokyo). There are over 500 banks with offices in London, and it is the leading international centre for banking, insurance, Eurobonds, foreign exchange trading and energy futures (Berg, Maxine, 2005).

Currency

London is the world capital for foreign exchange trading. The highest daily volume, counted in trillions of dollars US, is reached when New York enters the trade. The currency of the UK is the pound sterling, represented by the symbol £. The Bank of England is the central bank, responsible for issuing currency. Banks in Scotland and Northern Ireland retain the right to issue their own notes, subject to retaining enough Bank of England notes in reserve to cover the issue. Pound sterling is also used as a reserve currency by other governments and institutions, and is the third-largest after the U.S. dollar and the euro (Berg, Maxine, 2002).

Exchange rates

(Average for of each year), in USD (US dollar) and EUR (euro) per GBP; and inversely: GBP per USD and EUR. (Synthetic Euro XEU before 1999) Caution: these averages conceal wide intra-year spreads. The coefficient of variation gives an indication of ...