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Is the Reliance on the Financial Sector an Inherent Weakness of the Uk’s Liberal Market Economy?

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Submitted By papitee
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Is the reliance on the financial sector an inherent weakness of the UK’s liberal market economy?

The United Kingdom’s City is an internationally recognised financial centre. Given the predominance of the City, the UK’s economy finds itself accommodating to this active and volatile industry. Before discussing whether or not this reliance on the financial sector is an inherent weakness of the UK’s liberal market economy, two questions need to be explored: firstly, how liberal is the UK’s liberal market and; secondly, how reliant is it on its financial sector? This will be the focus of the first part of this essay and it concludes that with increasingly liberal policies becoming conventional wisdom in British politics, the continuing expansion of the financial sector is inevitable. The second part will analyse the consequences of the Financial Crisis and how the UK’s dependence on the financial sector is, within this context, a momentous drawback. However, the third part of this essay will explore the idea that although better regulation and governance is necessary, the UK should maintain its dominance in the financial sector as it has become inherent to British economic culture and offers comparative advantage over other economies.

Political ideology and resulting policies are very influential in promoting or reducing the magnitude of certain economic sectors such as manufacturing, agriculture, mining or financial industries. The remarkable expansion of the British financial sector is therefore a direct result of policies that facilitated and enhanced its growth.
‘[A]ll markets are socially and politically constructed (…) The appearance of markets, their scope, operation and regulation – and even their all too frequent failure and need of rescue – have inevitably social and political dimensions, influenced by national culture, politics,…...

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