Effect of Recession on the UK Fashion Clothing Retail Sector - Dissertation Example

The UK experienced a high unemployment rate since the effects of recession resulted in retrenchments, low demand for products and services, low money supply, stricter borrowing terms and conditions, and relatively low purchasing power due to inflation. Fortunately, the prices of clothing remained low due to thousands of alternative sources of clothing with low cost. Large retailers provide the bulk of the sales for the Fashion Clothing Industry. They are the multinationals like the Arcadia Group, Marks and Spencer, Tesco, New Look, Argos, Next, Primark, ASOS, The Body Shop, Robinson Webster Holdings.

But there have been thousands of other small retailers, about 12,000. For all these retailers, the impact of the recession was a combination of a decline in the business performance sometimes from the last quarter of 2008 to the 1st quarter of 2009, and a drive to do business in other countries like North America, Europe, and Asia. Then another decline took place in the first quarter of 2011 right after the Bank of England decided to stop Quantitative Easing toward the end of 2010. Money supply, lending, employment remained low 2 years after Quantitative Easing injected £200 billion into the economy.

Poor consumer spending and poor consumer confidence paralyzed business prospects within the UK. It appears that these Fashion Clothing Retailers are hoping that globalization will bail them out of recession while the UK gradually recovers.The recession was defined by the Bank of England (2011, p. 20) as a financial period wherein two consecutive quarters show declines in output at constant market prices. The British Chambers of Commerce announced this in November 2008, according to BBC News (2008).

It was during the second quarter of 2008 when the UK economy went into recession. It led to a decline in the output of the economy as well as an increase in the unemployment rate. There has been a decline in the real output by 6.4 percent. However, in the second quarter of 2010, it was apparent that GDP had grown by 1.9 percent. Not only the UK but also the developed countries throughout the world experienced a reduction in the outputs (Bell, & Blanchflower, 2010).