Every crisis has a unique cause, as well as characteristics; however, the following are typical amongst the factors responsible for generating this disaster: overshooting of markets; rise in credit; excessive debt leveraging; incorrect view of dangers; a country’s capital flight; off-balance sheet procedures by banks; macroeconomic policies that are non-sustainable; deregulation with no appropriate system of supervision; and latest financial instruments utilized in an inappropriate manner. The distinctiveness of the current disaster is that it happens to be a combination of a financial crisis coming from one of the largest world economy, i.e. the USA, with a universal downturn. The present financial crisis got triggered by the replete of the housing bubble, together with the consequent sub-prime mortgage crisis within the USA. Although the crisis has not yet been thoroughly analyzed, there are suggestions by experts that a number of causes explaining the reasons for the sub-prime crisis, which exploded in August 2007 in the USA ( Hansjorg & Milka 2011, p.36). There are two significant trends in the years resulting in the crisis; firstly, interest rates had been dropping since the 1980s, secondly, following the financial crisis in Asia during 1997–1998, countries began accumulating foreign exchange reserves, aided by the current account deficit of the US. The majority of countries diverted part of their reserves to sovereign wealth funds put into higher-yielding assets compared to the US Treasury, in addition to other government securities, streaming into high technology stocks and, following the “dot.com Bubble” spout in 2000, to housing markets within the USA and countries such as the UK. The continuous falling of interest rates, along with the large...
This paper clearly outlines the effectiveness of the economic response of the UK to the global financial crisis challenges.
Every crisis has a unique cause, as well as characteristics; however, the following are typical factors responsible for their origination: overshooting of markets; rise in credit; excessive debt leveraging; incorrect view of dangers; a country’s capital flight; off-balance sheet procedures by banks; macroeconomic policies that are non-sustainable; deregulation with no appropriate system of supervision; and latest financial instruments utilized in an inappropriate manner.
In March 2011, the Government published its “Plan for Growth” This plan had four ambitions: creating the most competitive system of tax within the G20 group of key economies; making the UK the best place within Europe for starting, financing and growing business; encouraging investment, as well as exports as a key to a more balanced economy; and finally creating a more educated workforce that happens to be the most flexible within Europe.
Amongst the measures announced were a lessening in the tax rate on the profits of businesses; an internationally competitive tax rule governing multinational organizations; tax enticement for company investment; an embalm of deregulation particularly for helping small businesses; additional investment within infrastructure, science, vocational training, research and development.
In 2009, the international leadership of the UK through its chairmanship of the G20 assisted the world in taming the worst economic crisis. It succeeded in drawing the leaders of the world's main economies at the G20 Summit thereby agreeing on strongly coordinated action of stabilizing the world economy.