The sub prime crisis meant the fall in the value of US dollar against most currencies of the world. The tentacles of subprime crises choked the progress of the UK economy to some extent and forced an interest rate cut. However with the expectation of the global economy to increase by 5% the UK markets expanded rapidly. Let us now compare the growth of UK economy with the other major economies of the world and discuss the various issues that affected the UK economy in 2007. We will also see the positive and negative issues that are now affecting the UK economy in 2008 and see whether the UK economy will continue its good run or struggle in 2008.
In 2007, the growth in the emerging markets was stronger than expected and the growth in the developed countries was below the expected level. However, among the developed economies, UK was an exception recording a growth higher than the expected level. Growth in the UK economy was 3.1 % which is about 0.7 percentage point better than the expected growth. Growth in US economy was 2.2% against 2.3% predicted at the start of the year 2007. Growth is Japan was 1.8% while the expected growth was 2%. It is important to note that US and Japan are the largest economies of the world. ...
UK economy has performed strongly in 60 consecutive quarters.
Issues that affected UK economy in 2007
In the middle of the year 2007, negative sentiments were running high in England and the UK economy showed signs of recession. Some analysts felt rumours about a possible recession were highly speculative as the growth in the UK economy was well above the target.
Although the UK economy's growth was well above target there were certain issues that raised concern.
1. Global credit market crisis:
The break out of global credit market crisis in the second half of 2007 forced the US to slash its short term interest rates by 100 basic points. UK joined US in slashing the interest rate and made minor changes to its monetary policy. The credit market crisis also resulted in lower bond returns in spite of the strong economic growth and higher interest rates. During this crisis the banks suffered from lack of credit to fund the growing economy.
2. Fall of UK housing market:
Worries about a possible downfall of UK housing market made recession a high possibility. The UK housing market experienced severe downfall of prices. The housing market also saw very few mortgage approvals and lending in the 2007. Very few mortgages were approved in UK because of the high rate of defaulters in US. The high default rate of borrower lend to the sub prime crisis in US. UK did not want a similar situation in its economy.
3. Recession in manufacturing industry:
The manufacturing industry was already into its second year of recession. The manufacturing sector performed dismally bad in 2006. Experts believed that the manufacturing industry because of its poor show in 2006 would suffer from lack
The year 2007 was a year of surprises for the UK economy. The UK economy fared really well as per the market expectations. Comparing the forecasts made by the market analysts in December 2006 to the actual data available at the end of year 2007, the results are really surprising: the growth was stronger in 2007 than was expected…
The rapid increase in production costs due to higher costs of doing business resulted in inflation; thereby reducing consumer purchasing power and real incomes. For instance, the consumers sharply cut down their spending amid low real incomes, which led to negative GDP growth, aggregate consumption, production and saving (BBC Article, 2008).
This is in relation to the economy and infrastructure, as well as labour and the people where the games are expected to have benefited the UK. The impact of the Olympic Games to United Kingdom will ever be felt and seen even after the games ended in relation to economic advancements, developments and features, which include unmatched infrastructure and other economic impacts.
The author of the essay suggests that tourism industry has gained worldwide prominence in most countries in the world. stresses that so many countries depend on the tourism industry for its economic upliftment and economic miracles had been truly achieved by a mere taking advantage of whatever beauty and charm of its tourism sites that God has endowed the nation with.
Storey (2001) suggests that such economies require a detailed knowledge of the processes involved by the corporate sector, organised in a geographical manner (Storey, 2001: 70) targeting many origins. Therefore it is better to consider that UK knowledge economy is actually 'information knowledge economy' which is concerned with the impact of knowledge economy on the knowledge production of organisational management.
According to National Bureau of Economic Research (NBER), recession is a “significant decline in economic activity lasting more than a few months” (Recession Org website). However, a general view about regression
on the GDP numbers for the years 2008 and 2009, one learns that “the economy contracted even more sharply than previously thought in the first quarter of 2009: 2.4 per cent compared to the preliminary estimate of a 1.9 per cent contraction.” (Lynch, 2009) The promising
According to the report the economy of any country is affected by its domestic and international economic conditions that are largely due to the operations of the business units. UK might be stronger in the financial activities and market condition but the international economic situations have a higher influence in the domestic market.
The researcher of this essay will make an earnest attempt to provide an evaluation of the perceived benefits and costs of a single currency in an integrated market. This research is also being carried out to evaluate the case for sterling joining the Eurozone, i.e. adopting the Euro from the point of view of British business.
Importantly, the economy is ranked among the biggest economies that guarantee a large degree of freedom. Major improvements that have been witnessed in the economy since 2003 and an increase in government spending, monetary freedom, investment freedom, trade freedom, fiscal freedom, freedom from corruption, and labor freedom.
Britain even has natural resources to produce steel and it has abundant amount of coal and has a very huge coal mining base. British even have access to textile raw materials that are used to produce clothing items and other
3 pages (750 words)Essay
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