The United Kingdom of Great Britain and Northern Ireland has been a state with one of the largest economies in the world for hundreds of years. The Bank of England, which is the central bank of the United Kingdom, gained its independence to set the country’s monetary policy in 1997. The key responsibility of the Bank of England is the monetary stability of the financial system. All decisions are taken by the independent Monetary Policy
Committee (MPC), which sets the interest rates to meet the inflation targets. The MPC is accountable to the House of Commons Treasury Committee, which has no power of veto on the MPC appointments.
The Bank’s independence helps to keep the inflation low, as the Bank of England does not cut interest rates for political reasons, strengthening the confidence in the country’s monetary policy.
Private equity is a form of investment into assets of private firms, which are not quoted on a stock exchange or traded publicly. Such investments are made to gain access to the companies’ revenue sources, which can lead to receiving high returns on these investments. Private equity funds often choose the leveraged buyout strategy, as they use debt to finance their acquisitions. These funds buy shares of the underperforming companies for a fast sale after increasing their value. They often cut jobs and sell off some assets, leaving thousands of people unemployed, which is bad for the country’s economy.
However, the venture investments, a type of private equity investments, are made to finance the start-ups and existing businesses with no funds available for the future growth. Private equity strategies have different consequences as the investors have different goals. Private equity investments can be considered as good or evil, but most of them provide capital for developing new products or technologies and business expansion.
References
Bank of England. (n.d.). The Bank’s relationship with Parliament. Retrieved from http://www.bankofengland.co.uk/about/Pages/parliament/default.aspx
