Causes and effects of recession in uk - Essay Example

The causes and effects of the recession should be examined to help scholars and the local population alike come to full understanding of the worsening situation. Historically the UK has experienced recessions five times between 1974 and 1991. In recent times the economy between July and September 2008, there were signs that the UK was entering a recession when it shrank for the first time in sixteen years. In January of 2009, confirmation that the UK was in recession came from the Office for National Statistics after showing that the gross domestic product fell 1.

5pc in the first quarter of 20008. Compared to the 1990s when the economy shrank in a single quarter by 1.2pc this recession is considered to be far worse. There are several causes of the recession in the UK. While the world started to experience a recession the situation in the UK was imminent especially when the United States of America started to decline. International trade is one of the factors of the UK recession. As the economic situations in countries begin to worsen trade suffers because governments in taking several precautions do not trade with other countries as they use to thus making the global recession even worse.

Consequently, if imports exceed exports this will have negative effects on the trade gap as was experienced in January 2009. The trade gap went up to £8.3bn. The Office for National Statistics reported that this was caused by falling exports to non European countries especially the United States. Exports to countries outside of the European Union fell by sixteen percent. Economists have predicted that a weaker pound would have a more positive effect but that was not proven to be so. A signal that domestic demands for goods were also falling was evident in the figures given for the imports of goods.

These imports decreased by 1.8 percent to 28.2bn pounds. The credit crunch experienced in the United States of America was soon felt in the United