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The Reasons for Economic Crisis in UK
With the international financial crisis sustainable developing, the virtual and the real economy of the United Kingdom is being impacted severely .Currently the United Kingdom is facing with the most serious economic problem in a half century. Analysts believe that this economic downturn is more acute than originally expected and will last a long time. So our group conducts a research about the reasons for economic crisis in UK.
A global economic crisis was influenced worldwide as well as UK. Several long-standing problems led to the crisis indeed. These included high oil prices, which led to both high food prices and global inflation. A substantial credit crisis leading to the bankruptcy of large and well established investment banks as well as commercial banks in various nations around the world. Increased unemployment is already lasting a long time. These long-standing problems predict the possibility of a global recession.
In 2008, notably oil and food rose so high as to cause genuine economic damage, threatening stagflation and a reversal of globalization. In February 2008, Reuters reported that global inflation was at historic levels, and that domestic inflation was at 10-20 year highs for many nations. From the beginning of economic crisis, the unemployment rate rose rapidly in UK. International Labor Organization predicted that at least 20 million jobs will have been lost by the end of 2009 due to the crisis.
2011 March to May, the unemployment rate remained high at 7.7%, while the inflation rate will reach to 5% this year. International Monetary Fund has recently reported that the British economy still faces significant risks, including high inflation, high unemployment and low growth.UK economic growth this year is expected to be only 1.5%, 1.7% lower than the British government expected. In a case, in which the U.S. debt in the global economy is downgraded and the possibility of the second bottom-depth development is increasing as well as the European debt crisis is expanding vertically, the British main external market of trade and investment risk has abruptly grown. Besides the riot recently in north London has from England to Birmingham, Liverpool and other cities spread quickly, showing the gradual evolution of the British economic crisis of social crisis, which is undoubtedly the UK economy recovery is worse.
The influence of Economic Crisis is terrible. How can Britain solve this big problem?
With the precedent of United States of America, there is no doubt that the British government will do the same things when they solve the problems of Economic Crisis. But whether increasing the financial expenditure, or soaring the money supply, in essence, is a burden of future instead of the economic stability for now. But in Economic Crisis, the Bank of England has no choice.
Britain tends to cut spending to repay debt rather than inflation, at the same time, Britain also increases the competitiveness of economic recovery.
In 2009, the Bank of England used liquidity injected into the tool frequently, made a large financial stimulus plan, and expanded its quantitative easing program. This program involved buying the governments and the company’s bonds, in order to increase the amount of cash in the economy, aims to stimulate spending and support the bank to lend. The Bank of England also reduced the interest costs sharply, for the sake of the promotion of the growth of the UK economy to return to the track.
The Bank of England invested £ 50 billion in 2010 and implemented the financial regulatory reform, in order to establish the authority of the Bank of England.
Everyone should have confidence to face the crisis. Just keep smile and happy, the Economic Crisis can be beat quickly.
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