Impact of the 2008 Recession on the UK's Gross Domestic Product (GDP)

This report provides an in-depth analysis of Gross Domestic Product (GDP), defining it as the total fair price of goods and services produced within a nation during a specific period. It outlines three methods of GDP calculation: production, income, and expenditure approaches. The report further examines the impact of the 2008 recession on the UK's GDP, detailing the economic downturn and its effects on various sectors, including banking, manufacturing, and real estate. It discusses the rise in unemployment, inflation, and the decline in productivity during this period. Finally, the report explores how the recession affected the quality of life for UK citizens, leading to job losses, increased poverty, and emigration, before concluding with a summary of government measures taken to stabilize the economy post-recession.

GROSS DOMESTIC
PRODUCT

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Gross domestic product..........................................................................................................3
Calculations of the Gross Domestic Products........................................................................4
Effects of the recession of 2008 on the UK's GDP................................................................6
Discussion over how this recession period affected the quality of life of the UK citizen.....8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
This report underpins the concept of Gross Domestic Product. In monetary terms, gross
domestic product is the total fair price of all the goods and services manufactured in a nation
within a particular time period(CAHYANI, M.L., 2019). It is a wider term to be used to measure
the economic condition of a specific country within a specified time frame. It can be determined
by three ways using return, expenses and production. Further this report also stipulates after
affects of the recession period of 2008 on the GDP of the UK country in detail and an elaborated
discussion has been done on the changes that have affected the life quality of the UK's citizens.
MAIN BODY
Gross domestic product
The concept of GDP was come at the end of 18th century. Gross domestic product that
is( GDP) is the measurement of goods and services which produce in a country in a specific
period(FIRMANSYAH and F., 2019). It determines the total revenue generated from the
production or amount consume to produce final goods or services. It can be determined on
annual or quarterly basis. All the finish goods and services produce within a country carrying a
fixed financial value during a prescribed time. To measure economic activity in a country, GDP
plays an important role. The GDP is calculated all the public and private sector. The country
faces the two situation -
Trade surplus when export domestic product and services to the foreign countries exceed , the
value of import goods and services from the foreign countries. The trade surplus shows inflow
the money in foreign currency. It creates employment opportunities in the global market.
Trade deficit when the people consume the more foreign products that is country imports more
than its exports. It is a negative impact on the country economy. In GDP the following services
and productions are not included.
 To selling of used goods
 Goods are used for own consumption.
 The work has done within the family, friends.
 Free services provided.
 The services provided which is not a legal under the law and regulation.
 To transfer cash.

GDP per capita means to calculate the country population per person. It means the inflow and
outflow of per person in average standard living. GDP has different types-
1. Nominal GDP- The production of price is calculated on the nominal GDP that is goods
sold in a current year. It is calculated in a local currency value or U.S dollars. It is used to
compare the output in a different quarter of the same year(Indonesia, S.,2018).
2. Real GDP – It means the goods and services prices are calculated on the based of
inflection or deflation basis. To higher prices does not mean to change in quantity and
quality of product it means to high of country GDP. The higher prices is a expand in the
production. Change in market value is the direct impact on real GDP.
3. GDP Growth rate- The output is calculated year to year basis. If GDP growth rates is
high then economy becomes overheat and increases the demand of goods and services
due to lower prices then central bank increased the interest rates. If GDP growth rate is
low then central bank provides the fund at a low rates.
4. GDP purchasing power parity- It means GDP is calculated on the basis of difference
between country prices and living standard cost in different countries to compare the
basis of output and income. In modern concept GDP is use to measure of welfare and
after that it become the necessary tool to evaluate the country economy. It evaluates the
output of the nation and does not measures the profit earned by foreign country. The
country knows the reason of change in growth rate quickly but it directly influence the
cost of society to affect of environment.
In currently 2022 the GDP is INR 236.55 trillion (8.68%) that is US $3.05 trillion . In year 2009
the GDP growth rate was low that is INR 3.09%.
Calculations of the Gross Domestic Products
The GDP is calculated in three methods, all of give same answer. This approach
determines output and income of the economy.
1. Production approach- This approach is also known as value added approach. In this
approach the total of output at every level of the organization(Indonesia, S., 2010). It
views reversed from the vantage point to completed the economic activity. In according
to Organisation for Economic Cooperation and Development -
 To calculate the total value of domestic output out of economic activity.
 Determine the cost of raw material, labour, and overheads to use make final product.

 Minus the cost of final product from the total value of domestic output.
Gross value added= total value of domestic output – total cost of final product.
Total value of domestic output means sales value of goods and services added change in
inventory that is closing inventory minus opening inventory. GDP factor cost means the total
value of GVA to perform through various economic activity(Order, E.E. and Product,
G.G.D.,2018). GDP producers prices means to add the sales tax, value added tax in the GDP
factor cost and minus grants on the product.
 2. Income approach – In this approach the GDP is calculated on the basis of output and
income of the organisation. The income is earned by different types such as -
 To interest received from investment.
 Profit earned through company
 To income earned as a wages salaries and employment labour.
 Agriculture income
 The income earned by self employment.
The GDP is calculated the total of all above income minus of indirect taxes and grants .
GDP = Total wages paid to employees + Gross profit + Gross income (stated above ) -Grants
received on product.
3. Expenditure approach – It is the reverse of production approach. It says spending approach.
In this approach the GDP is calculated-
GDP = Consumption + Government expenditure + Investment + net export.
Consumption means the people pay the money to buy goods and services like cloth,
haircuts(Pratama and B., 2019). It is the biggest part of the GDP. Government expenditure means
expend money to investment in government plants, pay wages of government employee and
social protection. Investment means to invest in assets such as equipments, furniture and
vehicle. If shares are issued for the purpose of acquiring of assets, the money spent to purchase
of an asset it is the part of expenditure. Export means company producing product for the export
and import product is excluded from the consumption, government expenditure and invest.
The components of GDP -

Effects of the recession of 2008 on the UK's GDP
Before the recession period started in year 2008, UK's economy was stronger than any
other country in the world. Last two decades before the financial crisis was really vigorous and
buoyant(Purjanto, H.B.M., 2022). There was a great increase in the country's GDP that was
reflecting that country's economic condition is strong and booming. Inflation rate was low in the
2008 April July Oct 2009 April July
400
405
410
415
420
425
430
435
440
445
450 UK Gross Domestic Product (GDP) Per Quarter
Column 1
Months
£ Billion

country as well that was depicting good financial health of the country overall. With the
significant rise in the economy ,economists were very optimistic about the country's growth.
But the financial crisis of the year 2008 has badly affect the country's economy as the
total value of the all the goods and services produced in the country began to decrease. Country's
economy fell to the lowest points in the next quarters of the year 2008. The recession period was
for 5 consecutive quarters from the year 2008 till the second quarter of the year 2009. Country's
GDP fell to the lowest points as the products and services manufactured in the country were not
enough to strengthen the economy. There were not enough funds in the market to fund the
manufacturing activities within the country. All the funds are blocked in the market resulting
unavailability of required capital for the manufacturing and professional concerns.(Product,
G.D., 2020)
Due to this, businesses organisations were being lack of funds to fund their business
activities ultimately causing the increased unemployment rate in the country. Manufacturing
outputs were declined to the lowest level. That's why government had required to increase their
imports heavily from the other countries to fulfil the basic necessities of its citizens. In the
recession period, many industries got affected badly such as banking and financial,
manufacturing, trading, hotel, hospitality, tourism and travels and real-estate etc.
Unemployment reaches to the worst place. Many citizens had to loose their jobs as their
owners have enough money to bear their costs. Inflation rate were reached to higher point as the
business entities required funds to satisfy their capital requirements. Therefore they were forced
to sell their products at a high rate in the market so that extra funds can be generate.
During the recession period, productivity falling off to the worse level. Companies were
not in a position to hire more labours or to increase wages of previously hired labours and
financial institutions were not willing to provide them loans at reasonable rates, therefore
productivity down-fell.(ULFA, I., MUHARAM, 2021)
Share market got a hit by rate of 5.5% causing a great loss to investors and investment
institutions making it hard for the borrowers to pay their monthly loan instalment. After that
crisis, GDP of the country gradually increases year by year. The recent data shows that after such
crisis, economy takes a greater boost resulting higher GDP at a premium rate higher than the
growth rate before the crisis. Government took necessary steps to control the situation and to

increase the liquidity in the market to overcome the funding problems and to balance the capital
requirement.
Discussion over how this recession period affected the quality of life of the UK citizen
This recession period in the country's economy has affected life of the citizen to an
extent. Due to this crisis, many citizens had to loose their jobs and to face unemployment for
some period. Unemployment rate were at a highest point at that times. Citizens had to
experienced a hard time as they have to leave their home and their jobs. Poverty index were
significantly increased during the recession time period.(Wulandari, R.D., 2019)
Due to lack of the funds in market and losses in the share market citizens, citizens weren't
even able to pay their debts and prices for their basic amenities. As the economic conditions
were getting worse, some citizens chose to migrate to another country for the betterment of their
lives and to increase their living standards. As a consequence, the emigration rate had
significantly increased at that time and the living standard of the citizens were at a lower point.
Significant changes in the economy of the country had several impacts on the citizen's
life resulting in the hardship for them to live their lives in a better way. Because of the financial
crisis in the whole world, many sectors had affected. After the recession period gets over, various
measures had been taken by the government to the control the situation for the betterment of
their citizens. The government focussed to create opportunities to control the situation of
unemployment, increased inflation rate and to provide several new attractive possibilities to
increase the employment rates and productivity as well. The employment remuneration and
labour charges had increased to such extent that the labours and employees find them lucrative.

CONCLUSION
As concluded by the above report, GDP is a broader term to measure the economical
results of a country within a specified time-frame. It provide assistance to measure the efficiency
and the size of economy of a particular country and at what rate it grow over a period of time.
GDP can be calculated by three methods. These methodologies are described in the above report
in detail for calculation of the GDP of a country. In later part in the report, a broad analysis has
been done over what are the substantial effects on the UK's Gross Domestic Product since the
financial crisis of the year 2008 along-with the discussion over how these changes in the
economy of the country have affected the quality of the life of the citizens of the UK.

REFERENCES
Books and Journals
CAHYANI, M.L., 2019. PENGARUH GROSS DOMESTIC PRODUCT, INFLASI DAN
TINGKAT SUKU BUNGA TERHADAP HARGA SAHAM PADA PERUSAHAAN
PROPERTI DAN REAL ESTATE YANG TERDAFTAR DI BEI TAHUN 2013-
2107 (Doctoral dissertation, Universitas Putra Indonesia" YPTK" Padang).
FIRMANSYAH and F., 2019. ANALISIS PENGARUH GROSS DOMESTIC PRODUCT,
KECUKUPAN MODAL, DAN KECUKUPAN LIKUIDITAS TERHADAP
PEMBIAYAAN BERMASALAH (Studi Empiris Pada Bank Umum Syariah yang terdaftar
di OJK dan BI selama Empat Tahun Periode 2013-2016) (Doctoral dissertation,
Universitas Mercu Buana Jakarta).
Indonesia, S., [2010 Version] Y on Y Growth Rate of Gross Domestic Product by Industrial
Origin (Percent), 2011-2013 (Indonesian Version).
Indonesia, S.,2018. Gross Domestic Product of Indonesia by Expenditure 2005-2010. Statistics
Indonesia.
Order, E.E. and Product, G.G.D.,2018. VENEZUELA: ADDITIONAL TRACKING COULD
AID TREASURY’S EFFORTS TO MITIGATE ANY ADVERSE IMPACTS US
SANCTIONS MIGHT HAVE ON HUMANITARIAN ASSISTANCE.
Pratama and B., 2019. PENGARUH HARGA TEMBAGA, INFLASI, DAN GROSS
DOMESTIC PRODUCT (GDP) TERHADAP EKSPOR BARANG DARI TEMBAGA DI
INDONESIA KE 5 NEGARA ASIA TENGGARA TAHUN 2008-2015 (Doctoral
dissertation, Universitas Pembangunan Nasional Veteran Yogyakarta).
Product, G.D., 2020. National Statistics Office of Georgia. URL: http://geostat. ge/index. Php.
Purjanto, H.B.M., 2022. Analisis Pengaruh Foreign Direct Investment, Harga Komoditas Emas,
dan Pertumbuhan Gross Domestic Product Indonesia Terhadap Pergerakan Indeks Harga
Saham Gabungan Saat Terjadinya Pandemi Covid-19 (Studi Empiris Periode Q12010-
Q32020). Jurnal Ilmiah Mahasiswa FEB, 10(2).
ULFA, I.A. and MUHARAM, H., 2021. Peran Pertumbuhan Gross Domestic Product dalam
Memoderasi Pengaruh Foreign Direct Investment terhadap Stock Market Growth (Studi
Empiris Pada Negara ASEAN-5 Periode 2004-2019) (Doctoral dissertation, UNDIP:
Fakultas Ekonomika dan Bisnis).
Wulandari, R.D., 2019. Analisis Pengaruh Inflasi, Suku Bunga BI, dan Gross Domestic Product
(GDP) terhadap Rasio Non Performing Loan (NPL) pada Bank Umum di Indonesia
Periode Tahun 2013-2016. OECONOMICUS Journal of Economics, 3(2), pp.153-176.