Mastering IELTS Writing Task 2: Sample Essays and Analysis on Loan Interest Rates Effects

The topic of loan interest rates and their effects is a recurring theme in IELTS Writing Task 2. Based on past exam patterns and current economic trends, it’s likely to appear in future tests. Let’s explore a relevant question that has been featured in recent IELTS exams:

Some people believe that governments should not provide financial support to industries that are struggling due to high interest rates on loans. To what extent do you agree or disagree?

Analyzing the Question

This question touches on the influence of interest rates on loans and government intervention in the economy. It requires candidates to consider:

1. The impact of high interest rates on businesses
2. The role of government in supporting industries
3. The potential consequences of providing or withholding financial support

Let’s examine sample essays for different band scores, starting with a high-scoring response.

Band 8 Sample Essay

In today’s economic climate, the debate over government intervention in struggling industries due to high loan interest rates is particularly pertinent. While some argue against such support, I firmly believe that governments should provide financial assistance to these industries, albeit with certain conditions and limitations.

Firstly, high interest rates can severely impact businesses, especially in sectors that rely heavily on loans for operations or expansion. Without government support, many companies might face bankruptcy, leading to job losses and economic instability. For instance, during the 2008 financial crisis, many governments provided bailouts to banks and automotive industries, which helped prevent a more severe economic downturn. This demonstrates the crucial role government intervention can play in maintaining economic stability.

Moreover, certain industries are strategically important for a country’s economy and national security. Industries such as agriculture, energy, and defense often require substantial capital investments and are particularly vulnerable to interest rate fluctuations. Government support in these sectors ensures food security, energy independence, and national defense capabilities are not compromised due to temporary financial challenges.

Government Support for Industries

However, it’s important to note that government support should not be unconditional or unlimited. Financial assistance should come with strict oversight and requirements for restructuring if necessary. This approach ensures that taxpayer money is used efficiently and that supported industries work towards becoming more resilient and competitive in the long term.

Furthermore, governments should consider alternative forms of support beyond direct financial aid. This could include temporary tax relief, loan guarantees, or facilitating access to lower-interest loans. Such measures can provide the necessary support while encouraging businesses to adapt and improve their financial management.

In conclusion, while the notion of government support for struggling industries due to high interest rates is contentious, I believe it is often necessary and beneficial when implemented judiciously. The key lies in balancing immediate economic needs with long-term sustainability, ensuring that support fosters resilience rather than dependence.

Explanation of Band 8 Score

This essay demonstrates characteristics of a Band 8 response:

1. Task Response: The essay fully addresses all parts of the task, presenting a clear position with a well-developed argument.
2. Coherence and Cohesion: Ideas are logically organized with clear progression. Cohesive devices are used effectively, and paragraphing is appropriate.
3. Lexical Resource: A wide range of vocabulary is used accurately and appropriately. For example, “pertinent,” “bailouts,” “strategic importance,” and “restructuring.”
4. Grammatical Range and Accuracy: A wide range of structures is used with flexibility and accuracy. Complex sentences are handled well, such as “While some argue against such support, I firmly believe that governments should provide financial assistance to these industries, albeit with certain conditions and limitations.”

Band 6.5 Sample Essay

The question of whether governments should help industries that are struggling because of high interest rates on loans is complicated. While some people think it’s not the government’s job, I partly agree that governments should provide some support, but not too much.

High interest rates can make it hard for businesses to pay back loans, which can lead to problems. If many companies start to fail, it could cause job losses and harm the economy. For example, if a big car company can’t pay its loans and has to close, many workers would lose their jobs. This shows why government help might be needed in some cases.

Impact of High Interest Rates on Business

However, I don’t think governments should always step in. If they help too much, it might make companies rely on government support instead of trying to solve their own problems. This could lead to economic effects of negative interest rates, where businesses become less efficient. Also, using taxpayer money to help private companies might not be fair to everyone.

Instead of giving direct financial help, governments could find other ways to support struggling industries. They could offer advice on how to manage money better or help companies find ways to lower their costs. This kind of support could be more useful in the long term.

In conclusion, I believe governments should provide some support to industries facing problems due to high loan interest rates, but this support should be limited and carefully planned. The goal should be to help industries become stronger on their own, not to make them depend on government help forever.

Explanation of Band 6.5 Score

This essay demonstrates characteristics of a Band 6.5 response:

1. Task Response: The essay addresses the main parts of the task, but the development of ideas is less thorough compared to the Band 8 essay.
2. Coherence and Cohesion: There is a clear overall progression, but cohesive devices are less sophisticated. Paragraphing is generally logical.
3. Lexical Resource: A sufficient range of vocabulary is used, with some attempts at less common words. However, the language is less precise compared to the Band 8 essay.
4. Grammatical Range and Accuracy: A mix of simple and complex sentence forms is used, with generally good control. There are some errors, but they do not impede communication.

Key Vocabulary to Remember

1. Economic climate (noun) – /ˌiːkəˈnɒmɪk ˈklaɪmət/ – The overall state of the economy
2. Intervention (noun) – /ˌɪntəˈvenʃn/ – The act of becoming involved in a situation to improve it or prevent it from getting worse
3. Bailout (noun) – /ˈbeɪlaʊt/ – An act of giving financial assistance to a failing business or economy to save it from collapse
4. Restructuring (noun) – /ˌriːˈstrʌktʃərɪŋ/ – The process of reorganizing the structure of a company or organization
5. Oversight (noun) – /ˈəʊvəsaɪt/ – The job of checking that a process or system is working correctly
6. Resilience (noun) – /rɪˈzɪliəns/ – The ability to recover quickly from difficulties
7. Contentious (adjective) – /kənˈtenʃəs/ – Causing or likely to cause disagreement or argument
8. Judiciously (adverb) – /dʒuːˈdɪʃəsli/ – With good judgment or sense

Conclusion

The topic of loan interest rates and their effects on industries is a complex and relevant issue for IELTS Writing Task 2. By understanding the key aspects of this topic and practicing with sample essays, you can improve your ability to address similar questions effectively. Remember to consider multiple perspectives, use relevant examples, and structure your essay logically.

For further practice, consider writing essays on related topics such as:

1. The role of central banks in managing interest rates
2. The impact of low interest rates on savings and investment
3. How interest rate changes influence consumer loans

Interest Rates and Consumer Loans

We encourage you to write your own essay on the given topic and share it in the comments section below. This practice will help you refine your writing skills and gain valuable feedback from others preparing for the IELTS exam.