StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

UK Government Policies in Response to the Emerging Financial Crisis in 2008 - Essay Example

Cite this document
Summary
This essay "UK Government Policies in Response to the Emerging Financial Crisis in 2008" discusses the Bank of England that warned that UK banks would require nearly £25 billion in additional capital in order to improve current economic weaknesses in the economy (Worldwide Invest 2013)…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.9% of users find it useful
UK Government Policies in Response to the Emerging Financial Crisis in 2008
Read Text Preview

Extract of sample "UK Government Policies in Response to the Emerging Financial Crisis in 2008"

The equity agreement for small banks was 100 percent, with larger banks such as The Royal Bank of Scotland and Lloyd’s at approximately 70 percent; costing the government approximately £37 billion thus far (Simpson).

The aforementioned illustrates that government leadership is ill-equipped with knowledge of the fundamentals of fiscal policy in which original capital injections to save banks from substantial losses did not correct the problems with the economy associated with the recession. The UK government attempted to modify the concept and ideology of a free market economy, giving it more authority and influence in governing the banking system. This is the mobilization of power resources (available government capital) to force a modification of the behavior of the private sector (Hales 1993). UK government representatives, without the necessary academic foundations of economic policy development, attempted to manipulate frenzied economic policy without taking into consideration the broader needs of UK stakeholders through this form of unethical self-protectionism. As a result, unemployment rates increased in the UK. In 2008, 17.4 percent of households were jobless, but in 2010, this figure spiked to 19.4 percent (Statista 2013).

            The United Kingdom is a monarchic democracy. However, in a democratic nation, representatives are elected by the people and society maintains the majority of influence over government actions and accountability. Barrett (2011) identifies that in order for a legitimate democracy to exist, it must maintain equality, transparency, and accountability. The UK government, therefore, stripped itself of credibility and implemented a variety of highly unorthodox economic policies without adequate representation from UK society. Government representatives likely understood that providing “appeals to the balance of power logic” is completely unable to rally public support for “expensive and risky ventures” (Markey 1999, p.145). It is quite common for government representatives in a democratic nation to illustrate that the government will work diligently to provide an equal allocation of resources to satisfy all consumers. However, in the mad rush to develop new economic policies to avoid banking institution collapses, the government did not provide the appropriate transparency in their actions and recognized that balance of power arguments would not foster social support. Therefore, as another effort toward government self-protectionism, they shrouded capital injections and other new fiscal objectives until these actions had been completed. The International Monetary Fund warned that “broad public consensus” would be needed to make a substantial adjustment to fiscal policy (Schifferes 2009, p.2). However, the government apparently did not agree but developed its own policies that challenged international sentiment, further reducing the trustworthiness of the competency and integrity of UK government officials.

            On September 30, 2008, the Irish government guarantees to the UK government that it will provide regular deposits within UK banks for a period of two years (The Telegraph 2009). This altered many years of economic sovereignty in the United Kingdom by working collaboratively with other struggling European economies. This represents a fundamental shift of internationalizing economic policies and placing more fiscal reliance on the capital from other nations to stabilize the national economy. Upon entry into the European Union, the UK was allowed to sustain its own currency even though the EU treaties expected member countries to remain politically and legally committed to the single Euro currency (Foreign & Commonwealth Office 2013). The new inter-dependence between neighboring European nations involving globalization of capital investments is challenging decades of economic sovereignty and further causing the UK government to consider a new currency union with Scotland, so long as Scotland agrees to limit the boundaries of its own economic autonomy. Again, this reduces the credibility of the UK government as a competent and compliant organization as new and fundamental shifts in economic policy erode the integrity of a government dedicated to conforming to treaties, democratic ideology, and social concepts of equality.

            As illustrated, the government’s response to the 2008 recession has substantially changed economic policy in the United Kingdom. The method of capital injection into the national banking system coupled with the establishment of new reliance on foreign depositors has made it difficult to continue to internalize economic policy in the country. Lack of transparency and lack of credibility are outcomes of these actions.

 

 

 

 

 

 

 

 

 

 

 

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“UK government policies in response to the emerging financial crisis in Essay”, n.d.)
UK government policies in response to the emerging financial crisis in Essay. Retrieved from https://studentshare.org/macro-microeconomics/1498555-uk-government-policies-in-response-to-the-emerging
(UK Government Policies in Response to the Emerging Financial Crisis in Essay)
UK Government Policies in Response to the Emerging Financial Crisis in Essay. https://studentshare.org/macro-microeconomics/1498555-uk-government-policies-in-response-to-the-emerging.
“UK Government Policies in Response to the Emerging Financial Crisis in Essay”, n.d. https://studentshare.org/macro-microeconomics/1498555-uk-government-policies-in-response-to-the-emerging.
  • Cited: 0 times

CHECK THESE SAMPLES OF UK Government Policies in Response to the Emerging Financial Crisis in 2008

The Impact of 2008 Financial Crisis on UK's Cross Border Mergers

Impact of financial crisis in the Field of Investment Through Cross Border Mergers in UK ……………….... This study aims to analyze the impact of 2008 financial crisis that has led to a global economic depression on the field of cross border mergers throughout the United Kingdom as part of exploring major expansion opportunities and the difficulties relating to the cross border mergers in the United Kingdom.... This research discusses the strategic ways on how to implement a cross border merger followed by analyzing the advantages of investing through them and tackles in details internal and external factors that need to be considered prior to a merger, the reasons for behind a successful or failed overseas mergers, impact on the shareholders' value and the trend of global mergers post the financial crisis....
36 Pages (9000 words) Dissertation

The Great Recession 2008

Indeed, some leading financial forecasters like World Bank and International Monetary Funds revised their initial to their growth forecasts in 2008 and 2009.... This paper utilizes an in-depth analysis and review of the financial crisis with emphasis on its causes, policy responses, and consequences.... According to the research findings the 2007 global financial crisis has had serious impacts on the economies of many countries, resulting to what economists call the Great Recession....
12 Pages (3000 words) Term Paper

The Basic Nature and Extent of the Economic Crisis

The financial crisis in 2007-09, which is the worst economic downturn since the times of the Great Depression, initiated in the US sub-prime mortgage market, from where it spread across the globe at an unprecedented rate, affecting almost all the markets in the world (Mohan, 2010, 3).... The paper "The Basic Nature and Extent of the Economic Crisis" highlight that the examination of the conditions that triggered the global financial crisis has set about a new line of thought on issues pertaining to financial policies and financial regulation....
20 Pages (5000 words) Dissertation

International Comparisons of Stock Market Volatility

During the financial crisis, there was a 50 percent drop in stock prices.... Data and methodology The studies also focused only on the emerging markets and not developed markets.... Below is a table showing the emerging and developed markets.... International comparisons of stock market volatility Introduction The 2007/2008 global economic crises made the financial markets respond to the contagion effect.... From the 2007 to 2012, the markets have been very volatile due to the fluctuations of the stock markets (Beirne et al 2008)....
6 Pages (1500 words) Essay

Mergers and Acquisition in Banking

The paper "Mergers and Acquisitions Issues in Banking during the financial crisis" finds out the major sector affected by M&A is the employment sector.... The present study is a review of literature related to mergers and acquisitions taken place during the recent financial crisis and its role or impact on various factors and stakeholders related to it.... The recent financial crisis brought tsunami to the banking industry globally resulting in bankruptcy being filed by those who were considered as the leaders and looked upon by the world to make and formulate new banking strategies....
16 Pages (4000 words) Book Report/Review

Money and Capital Markets

He cited the attempt of Eichengreen and Portes (1985) define a financial crisis as a disturbance that leads to widespread distress among financial institutions and market participants, disrupts the market's capacity to allocate financial resources efficiently, and has repercussions for the nonfinancial economy.... Hence he said that international financial crisis, according to their definition, is one where these disturbances and their effects spill over national borders....
19 Pages (4750 words) Essay

Can global governance avert economic crises

An example of a default crisis would be the sub prime crisis that occurred in the US in 2008 where the borrowers were provided with the loans that could not be sold in the prime market according to Whalen (2008).... An example of the crises is the financial crisis that is usually observed globally.... financial crisis according to Portes (1998) is a situation where the financial markets are disturbed in such a manner that the markets fail to allocate the capital....
7 Pages (1750 words) Term Paper

Globalization and the Current Crisis

ust recently, in 2008, the International Monetary Fund reported that academics had been debating on the impacts of globalization and acknowledged that one section of academics saw globalization as injecting dangerous volatility.... This paper argues the current global crisis is a direct result of the ongoing globalization.... Further, the IMF also emphasized that emerging economies can gain from financial globalization if they have sound macroeconomics, economies substantially open to trade, and well-developed financial sectors....
17 Pages (4250 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us