UK Financial Condition Recovering After Recession

The UK economy received a huge recession blow in 2009 when Prime Minister Gordon Brown confessed in public that the British Government had been unsuccessful in anticipating the financial crisis. According to the statistics back then, the British economy had declined by a rate of 1.5% as compared to the year earlier and this was perhaps the worst productive performance since the Great depressions of the 1949. This financial slump affected almost all economic sectors of the region including both housing and industries.

After experiencing depressing growth for about four quarters, the UK banks and economy now seem to have stabilized and quickly moving out of recession.

How Was The UK Recession Tackled?

The first measure was to induce central banking services to cut down rates. However, even after reducing the bank rate from a high 5% to lower 0.5%, the recession could not be controlled or deflected.

The bank of England adopted another approach, instead of lowering bank rate it tried to tackle the problem by fostering monetary funding to the UK economy. In this context, the money was created and assets were purchased from several financial companies making them feel more financially powerful and preventing them from firing employees. This tactic was also intended to persuade other merchant and private banks to lend further. Apart from this, many other measures like Asset Purchase Facility, Asset Protection Scheme, Credit Guarantee Scheme, and Special Liquidity Scheme were introduced to encourage lending and lower the affects of economic slowdown.

Can The UK Experience Recession Again?

Ensuing two consecutive quarters of economic growth (although slow), it seems like the UK economy is up on its feet and the odds of dipping back into recession once again are negligible. Government is borrowing less than before, unemployment rate has dropped to two-and-a-half million from more than three million, and the real estate building societies are also showing an obvious recovery.

Conclusion

Although the estimated GDP by the end of 2010 was not that convincing but there is a good chance of improvement in the UK’s financial condition. In spite of a few troubling indications like rising unemployment and tax raises, steady growth and recovery is expected to be documented in the early months of 2011.