Case Study: Global Financial Crisis, UK Economy, and Business Impacts

This mini case study delves into the impacts of the global financial crisis and the Great Depression on the UK economy. It begins by differentiating between recession and depression, highlighting their key characteristics and economic implications. The study then examines the effects of the global crisis on the UK, including the shortage of liquidity, decline in consumer confidence, and the impact on trade and GDP. Furthermore, it explores the consequences of the credit crunch on various economies, focusing on rising interest rates and governmental control of money. Finally, the case study identifies businesses in the UK that were relatively unaffected by the economic downturn, such as certain retail and transport organizations, offering insights into their resilience strategies. The study references several academic journals and online resources to support its analysis.

MINI- CASE STUDY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Determining difference between Recession and Depression.............................................1
2 Impact of global crisis on UK.............................................................................................1
3. Impacts of Credit Crunch over economies.........................................................................2
4. Business which will not be affected by the economic downturn.......................................3
REFERENCES................................................................................................................................4

INTRODUCTION
During the phase of global financial crisis and the great depression which has incurred
the great economic loss to all the countries whether developed or underdeveloped. The impacts
of such financial drawbacks leads the banking sector and financial institution to the bankruptcy.
Therefore, there were no funds or resources available in the banks to operate their activities. It
has invited various issues and obstacles in the countries like EU, USA and UK on which they
have experienced the obstacles like, inflation, GDP rate, Recession ad unemployment. UK
government has made various efforts in designing the financial policies and plans to overcome
with such crisis.
1. Determining difference between Recession and Depression
Recession Depression
This is the factor which indicates the negative
fall of economy consistently for the two quarters.
It is necessary for economy in terms of analysing
the GDP rate. Additionally, it is the factors
which helps in analysing the per capita income
of the citizens as well as the economic condition
in the country.
It is also a down turn of economy which
reflects the negative balance but it was for
the longer period. Moreover, the recession is
for short terms period while depression will
be denoted as the long terms period. It
impacts when the GDP has more than 10% of
reduction (Schwaab, Koopman and Lucas,
2017).
2 Impact of global crisis on UK
The impacts of global crisis on UK economy which has threatened the economic
conditions as inviting the Inflation, recession etc. which become the serious issues for the
government to be sorted out (Lin and Ye, 2017). Therefore, during the phase of Global financial
crisis which are damages the national economy which has affected the national financial
conditions such as:
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Illustration 1: UK eceonomic condition during GFC
(Source: The great recession 2008-13, 2017)
 Shortage of liquidity in banks and financial institution led the credit crunch.
 The financial instability reflected in fall of consumer business and confidence.
 The global recession impacts trade practices of country which reduces exports and
reciprocally increased imports.
 The GDP rate of nation has been fall due to Fiscal austerity.
3. Impacts of Credit Crunch over economies
There has been various impacts of credit crunch over the economies of several countries
the main reasons behind among such issues were.
 The rise in the rate of interest which leads the sudden shortage of funds in the banks. For
instance, 15% of the interest was in UK in 1992.
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 The influence of governmental parties in controlling the money (Guerrieri and Lorenzoni,
2017).
 The has been reduction of funds in the capital market.
4. Business which will not be affected by the economic downturn
There are various organisation which are not being affected by the global crunch in UK
such as Lehman Brothers, The Pier, MFI, Land of Leather, Ilva these are the retail industries. It
is because they had reduced the consumers credit down. In relation with transport organisation
British Airways has the better budgeting techniques on which credit crunch does not bother them
(UK recession: winners and losers, 2010).
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REFERENCES
Books and Journals
Guerrieri, V. and Lorenzoni, G., 2017. Credit crises, precautionary savings, and the liquidity
trap. The Quarterly Journal of Economics. 132(3). pp.1427-1467.
Lin, S. and Ye, H., 2017. Foreign Direct Investment, Trade Credit, and Transmission of Global
Liquidity Shocks: Evidence from Chinese Manufacturing Firms. The Review of Financial
Studies. 31(1). pp.206-238.
Schwaab, B., Koopman, S. J. and Lucas, A., 2017. Global credit risk: World, country and
industry factors. Journal of Applied Econometrics. 32(2). pp.296-317.
Online
The great recession 2008-13. 2017. [Online]. Available through
:<https://www.economicshelp.org/blog/7501/economics/the-great-recession/>.
UK recession: winners and losers. 2010. [Online]. Available through
:<https://www.theguardian.com/business/2010/jan/26/uk-recession-winners-and-losers>.
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