Examine the impact of the recent recession in the British Economy Essay

Examine the impact of the recent recession in the British Economy - Essay Example The contraction over the six quarters of the recession was 6.2%. That peak-to-trough decline was less severe than in Japan, Germany and Italy, but the recession lasted longer than in any other G7 economy†. The recession has impacted every sector of the British economy like production, consumption, employment, energy use, and government spending and tax revenue. The fragile situation of the banking system greatly impacted all sectors of economy and many private companies were forced to close down or end up in loss. Many corporate and small enterprises cut down their employees, who had an overall effect on the earning capacity and spending power of the public.Morover there was also a notable decrease in the demand of energy use as production and consumption of the country declined. Due to recession people look in for alternative renewable sources as they were unable to afford fuel charges as they suffered from lower income and lower unemployment rates. Looking briefly in to the e ffect of recession on different sectors of British economy, the following can be explained: I) Changes in Production and Consumption: Production and consumptions is an endless cycle of any economy or market of a developed, developing nation. Britain being a large economy has major public and private companies operating under its constituition.With the breakout of recession, the production and service sector of the country was doomed and this indeed resulted in a tremendous cut in the employment rate of the country. The finance sector and manufacturing sector being interconnected was worse affected which led to the closure of small private owned organizations and many service outlets. In 2008 the UK GDP fell by 5.1 % and this could be mainly because the UK government supporting more the finance sector rather than the manufacturing sector. Due to recession the worst hit area was the construction sector of British economy. By December 2008 , the construction sector of Britain shrank at fast pace than ever, taking civil engineering and commercial sub sectors along with it.Morover the slump in the housing construction field resulted in a downturn in housing market sector. The manufacturing sector being interconnected affected all the production units of the economy which resulted in lesser profitability. Unemployment was the end result and lower household consumption was the end result. As per (Dolling) â€Å"Household final consumption expenditure accounts for about half of the expenditure measure of GDP and is seen as an important economic indicator.† II) Changes in Employment, Unemployment and Productivity; It is a very obvious fact that, recession can bring around sharp decline in the employment rate of an ecnomy.Since the productivity is low, there can be a very evident decrease in the job cuts and this is directly related to decreased house hold consumption .Many people were removed from employment and also faced with considerable cut in their salary r ate because of slumber economy. â€Å"Troubled house builder Barrett last week announced plans to cut 1,000 of its 6,700-strong workforce while Pen dragon, the country's biggest car dealer, laid off 500 workers†(Blackden).If such is the case with employment cuts, unemployment rates in the country can soar which will make the people with less or no spending power. Since recession of 2008, many students who have