...performance in recent decades from both an historical and international perspective. The UK has one of the largest and most globalised economies in the world. The UK was also the very first country to industrialise and historically for many decades was the leader of the global economy, however with the rises of China, United States, Germany and many others the UK has much less of a dominant role. Within recent decades the UK economy has faced many serious challenges, including three recessions in the early 80’s, early 90’s and late 00’s. Up until the onset of the recent financial crisis, output growth in the UK exceeded that in many other European countries. The UK’s economic performance remains one of the highest in Europe and it is still one of the most globalized countries in the world. Using 1980 as a base, in recent decades the economic output per head of population in Britain has risen giving significantly higher standards of living however the UK economy has been scarred by recession. The 80’s period saw great social, economic, and general change. Wealth and production progressively migrated to more newly industrialising economies. The early 1980s marked a severe global economic recession that affected much of the developed world. In the UK, the 1980s was a period of economic volatility. At the start of 1980, the biggest problem facing the UK was cost push inflation. In the late 1970s, UK inflation reached over 20%. This was caused by rising oil prices and wage push inflation...
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...Unit 2 Macro: Reducing Unemployment after a Recession Monday, July 11, 2011 by Geoff Riley [pic] How quickly do people find new work after they have been made redundant and experienced a period of unemployment? According to new research published in the May 2011 edition of the Economic Journal, only around one person in every ten unemployed in Britain finds fresh work within a month and nearly half of the extra unemployed created in the wake of an economic shock such as the fallout from the global financial crisis are still without a new job after six months. If government economic policies and the labour market generally are failing to get people back into paid jobs the impact of a recession on unemployment rates can last for a substantial time period bringing with it increased economic and social costs. [pic] According to the research, in the 2008-09 recession UK unemployment rose by over 850,000: from 1.6 to 2.5 million. Although this increase was less than many had feared on the basis of past recessions and the severe 6% drop in UK output, the end of recession has not brought a significant fall in unemployment. Instead, the unemployment rate has continued to fluctuate between 7.9% and 8.2%, having risen from a pre-recession low of 5.2% in April 2008 and standing at 7.8% as of February 2011. [pic] Some economists argue that government policy in the short term should focus on preventing widespread extra unemployment in the first place - for example subsidies for...
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...In the most recent recession, credit crunch (2007-08) has played a complex role than earlier crunches because financial innovation has allowed new ways of packaging and reselling assets. It was triggered with the growth of the subprime mortgage market in the United States which was caused due to nonstandard mortgages to individuals with irregular income or unknown credit profiles. Based on subprime and other nonstandard mortgages, new assets were developed which were then sold to investors in the form of repackaged debt securities of increasing sophistication. These new assets received a very high rating and were considered safe compared with more conventional asset classes. These newly developed assets provided good returns compared to other asset classes. However, they were not as safe as the ratings suggested, because their value was closely tied to movement in house prices. While house prices were rising, these assets offered relatively high returns compared with other assets with similar risk ratings; but, when house prices began to fall, foreclosures on mortgages increased. To make matters worse investors had concentrated risks by leveraging their holdings of mortgages in securitized assets, so their losses were multiplied. Investors realized that they had not fully understood the scale of the likely losses on these assets, which sent shock waves through financial markets, and financial institutions struggled to determine the degree of their exposure to potential losses...
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...1: Boom and Recession (P5 – Part 1) Current | Boom / Economic growth | Recession | Country - % - Year | Country - % - Year | Country - % - Year | GDP Growth rateUK – 0.5% 2015CHINA – 1.8% 2015 | UK – 1.5% 1983CHINA – 11.7% 1978 | UK – 0.3% 2008CHINA – 9.2% 2009 | Inflation rateUK – 0.1% 2015CHINA – 1.3% 2015 | UK – 4.6% 1983CHINA – 8.3% 1978 | UK – 3.61% 2008CHINA – 0.9% 2009 | Interest rateUK – 0.5% 2015CHINA – 4.35% 2015 | UK – 9.8% 1983CHINA – 7.5% 1978 | UK – 5% 2008CHINA – 2.52% 2009 | Unemployment rateUK – 5.3% 2015CHINA – 4.05% 2015 | UK – 2.6% 1983CHINA – 4.9% 1978 | UK – 5.4% 2008CHINA – 4.2% 2009 | Describe how the current economic environment is impacting on your two chosen Businesses (P5 - Part 2) TESCO Tesco is negatively affected by economic elements because it affects its price profits and the cost of its products and services. Unemployment rate is one of the factors that affect the company’s profitability. Unemployment decreases the demand for its products and services and in the end, its profitability. Unemployment is a major concern to the company because it is beyond its control. It affects its marketing opportunities and its overall performance in local and international markets. Even though Tesco is expanding its operations globally, it doesn’t make the profits it would be able to make because of unemployment. Its income over the past few years have greatly increased but since it is largely dependent on UK market; unemployment...
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...and share holders then enterprises come out regularly with the activity of reporting (Stittle, 2003). Enterprises know that by announcing their financial health (annual report) publically, they are able to connect to their shareholders, distributors and investors, which is very important for both growth and expansion of the business. Meanwhile, annual reports also assess market position as by expressing financial numbers the feedback of market (consumer, investor, shareholder and competitor) is testified and generated (Stittle, 2003). This study is going to access the importance of annual reports in terms of market analysis, productivity analysis and financial health assessment. The study will focus on Tesco, a giant retailer company of UK in order to better understand the importance of annual reporting (Flack, 2007). Tesco being a global retailer company holds a comprehensive reporting...
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...products and as an alternative they have to put the prices higher. With the prices going higher the result of this is rising inflation. As there are so many costs increasing the price of products becomes so high that the demands of these products start to fall as people are unable to pay for them. If this occurs this then leads to productivity falling as businesses do not need to make as many products or services being used so they start to cut costs. At this point businesses start to reduce the number of staff that they have or reduce prices to try and increase the demand of products. Profits also start to fall. After this an economy could fall into a recession. Once an economy has reached recession getting out of it could be difficult for it to get out because of the cycle of recession. For an economy to get out of recession is by some form of external stimulus either from the government or another investor. Once jaguar Land rover increases their prices, the demand for their products starts to fall. As the demand of their products start to...
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...Section B - Current UK Economic Conditions Information and definition UK The United Kingdom of Great Britain and Northern Ireland is also known as UK, United Kingdom or Britain. United Kingdom is a member of European Union, G 8, G-20, World Trade Organization, Common Wealth of Nations, United Nations Security Council, NATO, Organization for Economic Cooperation and Development (OECD). United Kingdom is a well developed country. It has a rich economy brought up by economies of its individual countries England, Scotland, Wales and Northern Ireland. Landon which is the capital of UK and England is the most important financial center for international business and commerce. UK is one of the most important globalised countries of the world. GDP GDP, or Gross domestic product is a measure of a country's economic activity, namely of all the services and goods produced in a year. It is arguably the most important of all economic statistics as it attempts to capture the state of the economy in one number. Quite simply, if the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting, and two consecutive three-month periods of contraction mean an economy is in recession. GDP is based on a huge survey of businesses and government departments compiled by the Office for National Statistics. Credit rating The BBC News explains that “Credit ratings are issued by credit rating agencies, private companies who sell their financial analysis...
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...international trading power. A highly developed, diversified, market-based economy with extensive social welfare services provides most residents with a high standard of living. The UK joined the European Economic Community (now known as the EU) in January 1973 and it is a founder member of the World Trade Organization. The United Kingdom is one of the world’s leading advanced economies. And it is the second biggest exporter of services in the global economy and ranked eighth in global exports of goods. The United Kingdom is the world's fifth-largest trading nation, highly dependent on foreign trade. It must import almost all its copper, ferrous metals, lead, zinc, rubber, and raw cotton and about one-third of its food. The United Kingdom's exports manufactured items like telecommunications equipment, automobiles, automatic data processing equipment, medicinal and pharmaceutical products and aircraft. Its main trading partners are European Union countries, The United States, China and Japan. United Kingdom is also the European Union's only significant energy exporter. It is also one of the world's largest energy consumers, and most analysts predict a shift in U.K. status from net exporter to net importer of energy by 2020, possibly sooner. Oil production in the U.K. is leveling off. Therefore, UK should export the oil energy from foreign countries. The economy of the United Kingdom is now primarily based on private enterprise, accounting for approximately four-fifths of employment...
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...market. One way they can test the market is to produce brochures with both rental price and sales price and gauging the reaction of potential buyers or renters. With the use of brochures Wilfred’s Construction will then be able to complete step five of the model, control and review as they will get feedback from the customers as to which they prefer. 4b) Forecasting involves attempting to estimate the future level of sales, one method is extrapolation which involves trying to identify a trend and continuing it into the future. The difficulty for Wilfred Construction is that sales have steadily increased until recently then dropped with the slowdown in the housing market, a possible reason for the slowdown in sales is that the UK has gone into recession therefore fewer people are...
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...persisted until the Second World War. Background To Great Depression: * The 1920s witnessed an economic boom in the US (typified by Ford Motor cars, which made a car within the grasp of ordinary workers for the first time). Industrial output expanded very rapidly. * Sales were often promoted through buying on credit. However, by early 1929, the steam had gone out of the economy and output was beginning to fall. * The stock market had boomed to record levels. Price to earning ratios were above historical averages. * The US Agricultural sector had been in recession for many more years * The UK economy had been experiencing deflation and high unemployment for much of the 1920s. This was mainly due to the cost of the first world war and attempting to rejoin the Gold standard at a pre world war 1 rate. This meant Sterling was overvalued causing lower exports and slower growth. The US tried to help the UK stay in the gold standard. That meant inflating the US economy, which contributed to the credit boom of the 1920s. Causes of Great Depression Stock Market Crash of October 1929 During September and October a few firms posted disappointing results causing share prices to fall. On October 28th (Black Monday), the decline in prices turned into a crash has share prices fell 13%. Panic spread throughout the stock exchange as people sought to unload their shares. On Tuesday there was another collapse in prices known as 'Black Tuesday'. Although shares recovered a little...
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...INTRODUCTION, RESEARCH OBJECTIVES AND METHODS 1 2. RESEARCH CONTEXT 1 2.1 Defining Difficult Economic Conditions 1 2.2 The Current Crisis 1 3. ANALYTICAL FRAMEWORK 1 4. THE BUSINESS STRATEGY AND MANAGEMENT LITERATURE 1 4.1 Business Strategy: General Considerations 1 4.2 Strategic Adaptation to Environmental Jolts, Turbulence and Radical Institutional Change 1 4.3 Strategic Adaptation to Recession 1 4.4 Retrenchment Strategies 1 4.5 Investment Strategies 1 4.6 ‘Ambidextrous’ Strategies 1 4.7 Business Size as an Influence on Strategic Adaptation to Difficult Economic Conditions 1 4.8 International Experience 1 5. CONTEMPORARY COMMENTARY ON THE CURRENT CRISIS 1 6. STRATEGIC RESPONSES IN THE RECESSION: DELIBERATIONS FROM A THINK-TANK 1 6.1 Introduction and Objectives 1 6.2 Business Responses in Recession 1 6.2.1 Knowledge Base 1 6.2.2 Unevenness of Recession 1 6.3 Modelling Strategic Change 1 6.3.1 Typologies of Strategic Change 1 6.3.2 Strategic Thinking and Strategic Actions 1 6.4 The Role of Innovation under Recession Conditions 1 6.5 Roles for Public Policy 1 6.5.1 Legitimise Change and Innovation within Organisations 1 6.5.2 Stimulate Experimental Approaches to Supporting Innovation 1 6.5.3 Promote the Provision of Finance 1 6.5.4 Pay Attention to Business Exits 1 6.5.5 Consider Small Firms/New Firms Initiatives 1 6.5.6 Redefining sectors and cross-sector initiatives 1 6.5.7 Policy Messages for...
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...HEFP Economics CW3 Sean Philip Lim, Group I As youth unemployment increases back towards the psychological one million mark as of March 2013 (Evans, 2013), there has been considerable debate among the public and the government on the reasons behind increasing youth unemployment. This essay will aim to decipher the reasons behind high youth unemployment figures and its repercussions on the state. It will accomplish this by first defining and explaining the types of unemployment and the ways in which it is measured. It will then discuss the plausible reasons followed by evaluating the effectiveness of solutions that are currently being implemented or proposed. Lastly, it will provide a value judgement on the consequences that might occur should high youth unemployment remain. Unemployment is defined as the ‘number of jobless people who want to work, are available to work, and are actively seeking employment’ (Gillespie, 2007, p.347). As of January 2013, unemployment stood at 7.8% (BBC, 2013) marking a downward trend since October 2011. Within unemployment, there is youth unemployment, defined as the ‘percentage of unemployed young people (16-24) in relation to every young person who is active in the labour market’ (ONS, 2013). As of March 2013, youth unemployment stood at 21.2%, a rising trend since August 2004 as depicted in figure 1 (Evans, 2013). Source: The Guardian, 2013 Figure 1 There are two methods of measuring unemployment...
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...The global economic recession has strongly created a lot of economics problems in world wide, such as consumer purchases fall, increase in unemployment and decline in house price . In the United Kingdom, housing prices also dropped, but during August the average cost for a home rose by 1.6%. This is, according to the article, mainly because of low interest rates and shortage of supply. Low interest rate, the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors), would create a outward shift in demand, which means the willingness and ability of buying commodity goods would increase. This happens is because low interest rate encourage buyer(consumer) to borrow more, which lead to an increase of spending, therefore this makes the equilibrium moved to a new position, resulting in a increase in price. According the article, the problem of house price is also cased by the mortgage repayments. Low interest rates would lead to lower mortgage repayments, this means that homeowners, usually predicted to sell their homes during a recession, to refrain from doing so. This again create a inward shift in supply of home, the willingness and ability of providing a commodity decreases, as less owners decided to sell their house, which in result the position of the equilibrium would change and lead to a increase in price about 1.6%. As mentioned in the article, someone predicted that when there...
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...Further Financial crisis occurs when the value of financial institution or asset price drops quickly. (Investopedia US, 2013) Today the world financial system is undergoing economic recession. It is assumed to have begun in the year 2007-2008. After the great depression US economy suffered a short term recession in 2001 but came out with it adequately. It also wide stood dotcom bubble bust, attack by terrorists and accounting scandals. Federal government decreased it rate 11 times from 6.5 in 2000 to 1.7% from the year 2000 in order to increase its liquidity in the economy. A man with no job, no income and no asset was able to afford a house mortgage. This rate was decreased to 1% in June 2003. In 2004 country’s elite banks like Lehman brother, Goldman sacs, Merrill lynch, Morgan & Stanley were relaxed with the net capital requirement 30-40 times. (Sivakumar and Krishnaswami, 2012)But after saturation point problem started rising with the rising interest rates. In 2007 it turned out to be a bad new when federal fund rate reached 5.25% in 2006. Many banks got erupted and with shortage of money. Central banks in several countries like UK, Europe central, Sweden, Canada, Switzerland, china etc help in adding world economy but failed. This economic crisis also exploded the economies of Arab nations, Japan, UK, Ireland, Greece, China etc. The consequences faced by these countries in the meltdown were low GDP, high inflation, low deflation, volatile stock market, increasing unemployment...
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...BA’s survival are: 1. Increase in oil prices. 2. Increase in competitors – low-cost airlines with low fares. 3. Global recession which cause a drop in passenger counts (especially in strong market like US and UK). BA realised that cost reduction for operations is essential to sustain the business, and they concluded that this could only be done through ceasing pay increment and staff retrenchment. BA’s CEO, Mr. Willie Walsh, concluded that changes have to be made only for the purpose of cost reduction, and this business cost needs to be reduced from top to bottom in order for BA to recover its loss. The first change was staff reduction. In 2009, BA started a retrenchment plan where 4900 employees lost their jobs. The reason was that BA thought the high staff number was not in proportion with its high cost. A significant change was that cabin crews have been reduced from 15 to 14 in long-haul flights as the additional staff was not ‘economically’ required. Mr. Walsh set the first example by not having his salary for one month. He further told the employees to take unpaid leaves within a month, yet still work for the company while on unpaid leaves. In addition, he had ceased all kinds of pay increments for at least two years due to increase in oil prices and recession. To cut down further costs, cabin crews’ working hours were also extended. Mr Walsh cautioned the staff that any resistance...
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