Finance & Accounting
Pages 6 (1506 words)
Comparison of UK’s Economic Performance with that of Germany for the Last 5 Years Economy of the UK UK’s economy is the sixth largest world economy in terms of nominal GDP, and seventh in terms of Purchasing Power Parity (PPT) (IMF, 2009, pg 235). In Europe, it is the third largest in terms of PPT after Germany.
However, it still retains a significant position in the world economy. In 2007, the annual growth rate for UK was at an average of 2.68%, according to the IMF (2009, pg 321). Growth in its financial sector contributed a larger economic part, but this declined in 2008 when it suddenly entered into a recession due to the global financial crisis. This began with the Northern Rock’s collapsing and being taken over into public ownership in February the same year. On the other hand, other banks were also nationalized. Such banks included Royal Bank of Scotland Group, HM treasury controlled 70.33 % of RBS’s shareholding and 43% of Lloyds Banking Group (IMF, 2009, pg 324). This recession caused massive unemployment that rose from 1,600,000 in 2008 to 2,500,000 by the end of 2009(Christopher, 2009, pg 303) The economy of UK was the strongest economy in EU in terms of interest rates, unemployment and inflation, which remained relatively down during the 2008-9 recession. Since then, unemployment has reached its peak of 7.8%, which is the highest level since 1990s (ELGA, 2008, pg 7). On the other hand, interest rates have been reduced to 0.5% (IMF, 2009, pg 342). In 2008, UK experienced twin shock in its economy, that is, increase in prices of commodities and financial turmoil. ...