This was due to the housing bubble burst earlier in the year. The UK economy followed the same trends of that of the US and the banks offered loans to the individuals without verifying the credentials for the…
The situation in the capital market was bad. The situation was further worsened by the fact that the housing loans were packaged as financial debt instruments and were sold in the capital markets. Companies around the world purchased the instruments and with the default of the loans, the instruments also became bad. Therefore, the economy overall was affected badly. (Walayat, 22nd August, 2007). The economy of the UK officially entered the recession with the decreased level of growth in two successive quarters. The Government and the banks helped the economy to face the tough situation with pumping in money and effecting rate cuts. This resulted in the Government borrowing money and thus was in a bad situation in the repayment of the loans. The companies were in a bad situation and they were looking to cut costs. There was huge job cutting among the companies and the unemployment reached massive levels. (Oxlade, 12th March, 2010; Bank warns of recession into 2009, 12th November, 2009). The recession was hard on the employees and the workers in different industries. The organizations restricted most of the benefits to the workers for cutting costs. A survey found that in the UK among a sample size of 704 organizations, 55% of the sample was planning to decrease the bonus and the pay or to freeze the process altogether. Among the sample size, 61% had no plans for recruiting new workers and 34% were contemplating on not recruiting the graduates. The labor market was in total disarray and the companies increased the off shoring process. The companies in order to cut costs were operating in flexible hours to allow the workers to work more. Bonus and incentives were not paid by most of the respondents. (Broughton, 10th August, 2009) . The situation was the same all over the world. Almost all the countries were more or less perturbed by the recession. Some of the major economies of the world were the most affected. In this paper, the countries of Japan and ...
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(The UK Economic Crisis on Businesses Essay Example | Topics and Well Written Essays - 3500 Words)
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