Credit Crunch and UK Economy

High school
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Business
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The subprime market crisis that hit the global financial markets in the summer of 2007 caused a series of negative market reactions on a global scale. The tightly entwined nature of world financial markets represents a global loop whereby occurrences in one market have implications in and for others…

Introduction

This describes the financial situation that forms the foundational basis for this study, the subprime mortgage meltdown in the United States that hit the global stage in the Summer of 2007, which accelerated into what is also termed as the credit crunch. In equating the ramifications of the preceding, the United States will serve as the starting point for the foregoing, tracing how the credit crunch became a global phenomenon, then honing in on how this all has and is impacting the UK economy.
The financial services sector is often a little understood arena owing to the complexities of how it operates within the context of international economic activity and the variables of the global market. The intricate nature of the ties between differing regions, and how they interact upon one another represents a complex set of macro and micro economic aspects within which this crisis developed and impacted every corner of the globe. In hindsight, the causes of the credit crisis are understood as were the warnings from economists and banking officials as to the potential ramifications of new types of derivative instruments whose long term effects were not understood, and not tested with regard to varied market and economic scenarios. ...
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