Tumultuous Period for the United Kingdom Economy - Thesis Example

The paper 'Tumultuous Period for the United Kingdom Economy" is a great example of a macro and microeconomics thesis. The years 2007 to 2009 were a tumultuous period for the United Kingdom (UK) economy and the global economy in general due to the global financial crisis. The downturn in the United States (US) sub-prime market triggered major stress in the international money markets and banking systems. As the crisis worsened, credit conditions tightened and private firms and households became uncertain about their economic prospects. The demand for UK exports also decreased and as a result, the borrowing costs in the private sector increased significantly. This, in turn, contributed to an employment downturn. Moreover, the prices of oil and other commodities became very volatile. In addition to this, banks experienced major liquidity problems such that some major banks such as Bradford & Bingley plc and the Northern Rock bank were nationalised (Chowla, Ouaglietti & Rachel 2014, p.169).

The global financial crisis was triggered by a myriad of factors. Key among the factors that are believed to have contributed to the crisis is the conduct of banks as financial intermediaries. In the aftermath of the crisis, banks around the world have received the brunt of the blame for the crisis. Some politicians, financial leaders and certainly many in the general public have blamed banks for the crisis because of the concern that they took on too much risk to the detriment of customers and countries they were supposed to serve (Jawadi, 2010,p. 1019; Liang, Xu & Jiraporn, 2013, p.2953). The perception has grown that the corporate governance of banks was so relaxed in the years leading up to the beginning of the crisis that protecting stakeholders became secondary to attempting to generate as much revenue and profits as possible (Adams, 2012, pp. 3-4; Kirkpatrick, 2008, p. 2). Consequently, many governments around the world have adopted a wide range of measures in a bid to mitigate the effects of the crisis and avert possible occurrences of a similar financial crisis in future (Stolz &Wedow, 2013, p.81-82). A considerable number of these measures have been directed towards improving corporate governance in banks (Liang et al, 2013, p. 2953).

In response to the tumultuous effects of the global financial crisis in the UK, in 2009 Prime Minister Gordon Brown commissioned Sir David Walker to conduct a review of the corporate governance of banks in the United Kingdom to determine the problems related to bank corporate governance, as well as recommend suggestions for how to improve bank corporate governance in the country (Mullineux, 2011,p.1; Walker 2009, p.9). The Walker Review identified that some of the existing pitfalls of corporate governance in the UK banking sector revolve around, functions and composition of the Board of Directors among other factors. The recommendations that were put forth from the Walker Report included changes to the composition and role of the Board of Directors of banks in the United Kingdom such that they are comprised of a broader range of people from within and outside of the banks they represent, as well as take on a greater risk-management role as opposed to a sole focus on revenue and profit generation (LeBlanc, 2010, pp.20-27; Walker 2009, pp.9-22).