Recession has been one of the important areas of discussion for the economists because it can take an economy many years back by slowing down its economic activities. The interdependency among countries because of the increasing globalisation and internationalization has…
The financial crisis that emerged from sub prime-mortgage crisis in 2007 in the United States transformed into a global recession. The financial and economic activities of about all the countries have been severely affected by this sub prime-mortgage crisis. The industrialised economies have been hit hard in this crisis. The UK economy underwent the impact of this crisis in the second quarter of 2008. During this period, UK faced the largest contraction in economy on record. However, the latest statistics of UK are predicting that era of soaring borrowing and economic downturn is over.
At the end of year 2008, British economy could not come out of recession, showing the lagging position of economy and everyone was afraid of the potential relapse in the following year. Although the recession emerged from sub-mortgage crisis in the United States, however, UK economy was at disadvantage because it was highly dependent on the financial sector. The poor performance of UK financial sector along with the increasing levels of consumers debt, were keeping the state at a lag behind the other industrialised states, thereby, preventing UK economy to recover from global recession.
The official statistics that have been published in January 2010 reveal that British economy is out of recession. While we cannot answer this question exactly, unless there have been some visible trends in the economic conditions.
Before analysing whether UK is out of recession or not, looking into what has happened to UK during the last few years (particularly before recession) will be very significant. During the last ten years, the investment and growth in UK has remained passive however, the economy has faced high levels of FDI. The financial sector has become stronger both domestically and internationally whereas; the manufacturing sector has gone down. Moreover, the growth of financial ...
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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 economic crisis which reached peak in 2008 had shaken the foundation of UK economy in a destructive manner. The recession introduced instability in all sectors of British economy and was hardly hit on the banking and housing sector. According to (The Economist)“The economy of UK shrank by 5% last year, this was biggest fall since the Great Depression.
Several macroeconomic indicators change mostly in the same way. Apart from change in employment status, other changes that take place involve changes in capacity utilization, investment spending, business profits, household incomes and inflation. All these fall during this period.
The result of all this is the debt of financial sector has risen sharply from (Calbreath, 2008). It now stands at 74 percent higher than it was in 2000 and 10 times higher than in 1980. As a result of globalisation the indicators in UK economy too have been dependent on cues from US markets.
downturn in the financial sector and this has triggered problems in banking, employment, financial markets and other aspects of the different economies worldwide. The United Kingdom (UK) has been experiencing symptoms of the recession for some time now and has now admitted that
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
Most declines have been trivial in the regional and national levels, with the exception of a few serious cases like the East Asian crisis of 1997 (Radelet and Sachs, 1998). It triggered short and long standing effects in nations,
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