Bankruptcy and unemployment on the other hand rises (Office for National Statistics, 2010).
The general belief in the cause of inflation is that recession comes after there is an extensive drop in spending. In combating the problem of inflation, governments usually adopts expansionary macroeconomic policies. These involve increasing the amount of money in circulation, decreasing taxation and increasing government spending.
In looking at the case of the UK Economy, it is a good example of the whole process of the period before recession and the macroeconomic conditions prevailing then, the start of recession and the conditions then, the whole recession period and the effect of the government actions on macroeconomic parameters and finally how the economy managed to come out of the recession.
The recession in UK economy began after it had experienced two quarters of negative growth in the period between June and December of the year 2008. This led to the falling of the GDP by 1.5 percent during the three last months of the year after the previous quarter had dropped by 0.6%. This is the biggest decline in GDP between two quarters ever recorded after the year 1980. This second quarter experienced the biggest fall in GDP within the same period or quarter. This recession lasted for a period of 18 months and it is the longest recession in the UK economy ever. ...