A Contemporary Survey of Recession in The British Economy
On 23rd January 2009, the British Government officially declared that Britain had entered its worst recession since 1991, when figures from the Office for National Statistics confirmed that the British economy had shrunk a worse than expected 1.5% during the final quarter of 2008. This followed a contraction in Q3 of 2008 of 0.6%, resulting in the qualifying two successive quarters of negative growth therefore technically defining a recession. This report considers the features of the British economy and particularly those that have resulted in the present day economic climate.
1. Introduction
On 23rd January 2009, the British Government officially declared that Britain had entered its worst recession since 1991, when figures from the Office for National Statistics confirmed that the British economy had shrunk a worse than expected 1.5% during the final quarter of 2008. This followed a contraction in Q3 of 2008 of 0.6%, resulting in the qualifying two successive quarters of negative growth therefore technically defining a recession. This report will examine the features of the British economy and particularly those that have resulted in the present day economic climate. I will begin by considering characteristics of the British Economy and its history.
2. Characteristics of the British Economy
The British Economy is a capitalist economy which is heavily taxed due to a large public sector. It was, in the 18th and 19th centuries the leader of the global economy, but is now not so, but still a key part of the global economy. According to IMF and World Bank data, it is the fifth largest economy in the world and its GDP (gross domestic product) per capita is the 22nd highest in the world ($2.772tn). Its main sector is services, broken down as shown below.
Source: International Monetary Fund & World Bank data.
3. A Brief History of the British Economy
The foundation of the British Economy was first established in the 17th century with the global settlement of British colonies. Slave labour in the American colonies developed a strong global framework of the farmed produce such as rice, cotton and tobacco. The industrial revolution that followed greatly accelerated the growth of the British Economy as new manufacturing and production techniques combined with the global framework Britain established led to a great deal of exportation and economic activity. In the 19th century as industrial Britain boomed, financial and corporate markets began to emerge as well as electrical and chemical industries that were aided by technological development. A continuation of technological development made mass production particularly efficient often yielding a greater output at lowered production costs. Because of this, output often exceeded domestic demand.
Economic trends however, began to develop, meaning that economic growth and expansion wasn’t always the case. The wars in the 20th century caused Britain to pool many resources into fighting which caused a great drain on the economy. The First World War (1914-18), for example, is estimated to have lost Britain a quarter of her total wealth in fighting the war. The 1930’s saw great depression worldwide and as a result of the Second World War (1939-45), British exports had decreased by 31%. (HyperWar: British War Economy [Statistical Summary]).
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