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.
Nobody downloaded yet

Recession in UK - Essay Example

Comments (0)
Recession refers to the drop in GDP (Gross Domestic Product) and it involves the fall in employment opportunities. Recession is one of the stages of the business cycles identified in economics. It generally leads to a slow in economics activities over some time…
Download full paper
Recession in UK
Read TextPreview

Extract of sample
Recession in UK

Download file to see previous pages... 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. The economy was characterized by an increased public borrowing of up to approximately 178 bn, and the GDP went down by 6%.
Credit Crunch is one of the factors that have been experienced in the UK economy during the recession period. This is an unexpected shortage of money for giving out as loans. As expected this leads to a fall in the amount of loans available. This can be caused by a sudden increase in interest rates, drying up of funds in the capital markets and a control of money directly by a government (Finance Blog, 2010).
In the case of the UK recession, the credit crunch was as a result of a sharp increase in subprime mortgages which originated in America but the result was felt in the rest of the world. In the UK, not many bad mortgages where given out like in the US, as it was better controlled than in the US. This however led to a serious problem for Northern Rock which had a high percentage of loans which where risky. It was not able to raise enough funds when the crisis came by in the capital market. It thus resulted to asking the Bank of England to be given emergency funds. Because of this, the customers did not have faith with the bank any more and they thus started withdrawing their funds from the bank. The credit crunch has resulted in an increase in the price for mortgages in UK where mortgages have become expensive (UK Economy Ltd).
Another factor experienced due to the recession is falling in prices for houses. This is as a result of the high cost of mortgages which has led to a fall in demand for houses. As a result, the price of houses has been forced to come down and this is a show that many are met with a negative equity. When the prices for houses are low, it means that the banks are not able to get back the initial loan. This has affected the firms dealing with such business like Bradford & Bingley which had specialized in buying and letting which is affected by falling house prices.
There is a collapse in confidence in the entire sector of finance. This result in loss of confidence on ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
UK economy during 2008 recession
The rapid increase in production costs due to higher costs of doing business resulted in inflation; thereby reducing consumer purchasing power and real incomes. For instance, the consumers sharply cut down their spending amid low real incomes, which led to negative GDP growth, aggregate consumption, production and saving (BBC Article, 2008).
4 Pages(1000 words)Essay
The Economic Recession: UK Responses and Theory Analysis
The same paper continues to say that it would be the greatest tragedy if people continue to say that they did not see it coming because it will happen again. The recession did not hit the U.S. alone but the whole world. Its effects were felt even in the small cities across the globe.
7 Pages(1750 words)Essay
The Recession in the UK
The result of all this is the debt of financial sector has risen sharply from (Calbreath, 2008). It now stands at 74 percent higher than it was in 2000 and 10 times higher than in 1980. As a result of globalisation the indicators in UK economy too have been dependent on cues from US markets.
4 Pages(1000 words)Essay
Impact of Recession on the UK Economy
The result of all this is the debt of financial sector has risen sharply from (Calbreath, 2008). It now stands at 74 percent higher than it was in 2000 and 10 times higher than in 1980. Quoting the figures from the Office for National Statistics, Monaghan (2009) indicated that the GDP figures recorded a dip of 1.5 percent in the final quarter of 2008
8 Pages(2000 words)Essay
Causes and effects of recession in uk
downturn in the financial sector and this has triggered problems in banking, employment, financial markets and other aspects of the different economies worldwide. The United Kingdom (UK) has been experiencing symptoms of the recession for some time now and has now admitted that
6 Pages(1500 words)Essay
How the UK Prime Minister should implement the fiscal policy at the time of recession
This is done by regulating government spending and system of taxation. When government spending is equal to tax revenue the economy has balanced budget. If government spending is less than tax revenue then there is budget surplus but on the other hand, if tax revenue
4 Pages(1000 words)Essay
Is the UK economy out of recession
According to National Bureau of Economic Research (NBER), recession is a “significant decline in economic activity lasting more than a few months” (Recession Org website). However, a general view about regression
8 Pages(2000 words)Essay
Is the UK economy out of recession
on the GDP numbers for the years 2008 and 2009, one learns that “the economy contracted even more sharply than previously thought in the first quarter of 2009: 2.4 per cent compared to the preliminary estimate of a 1.9 per cent contraction.” (Lynch, 2009) The promising
8 Pages(2000 words)Essay
Is the UK economy out of recession
More importantly, the process of recovering from this economic slump had been long and painful. United Kingdom (UK) has been a booming economy and it had remained buoyant for the
8 Pages(2000 words)Essay
Effect of Recession on International trade of UK
This paper sources its data from arguably most reliable internet sources and uses it to analyze the situation. Since the gross domestic product is a function of the recession, the paper uses it as a representative to interrogate its
8 Pages(2000 words)Essay
Let us find you another Essay on topic Recession in UK for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us