Recession is a negative growth economy in the last two quarters. In the post-war period the United Kingdom's economic boom and bust cycles of economic growth. A high inflation and high growth after a period of growth, in the economic recession. However, since 1992, the United Kingdom's economic growth a long time, the longest sustained growth in this century occurred. It seems that the UK has been temporarilyTo avoid the risk of a recession, but despite the forecast is positive, there are many factors that could cause the U.S. economy into recession in the United Kingdom.
Possible reasons for the economic recession might include:
1. Decline in home prices. Britain's economic dependence on the housing market strong. Most people have a home, hire is not common on the European continent. Borrowing costs are 1% of the income is high, because people from a large number of mortgage loans.
If house prices fall, then it's negative balanceEffect, this decline in private consumption and the negative impact of anti-dumping. Some say that house prices are overvalued because of speculation. However, some others believe that the UK market because of supply and the scarcity of consistent high quality. However, the housing market is easy, even a small increase in interest rates. When interest rates will increase borrowing costs, there will be consumer demand and consumption has dropped significantly.
2. In addition, a record highBorrowing by consumers, the U.S. economy may affect interest rates, an increased significantly. Savings rate has reached historic lows. When interest rates rise, then this is the immense suffering caused to consumers.
3. The decline of the manufacturing sector. In a very long time, the competitiveness of British manufacturing industry is still not with the rest of the world. Mainly because of competition from Asian countries, lower labor costs. Sector in the UK more and moreUnemployment, the unemployment rate rose to 5% (ILO Labor Force Survey to go)
4. High government borrowing. Surrounding the loss of government revenue has increased. This will reduce the impact of consumer spending.
5. The global economic downturn. If the world economic slowdown is reduced to reduce exports to the United Kingdom to obtain confidence in the economy needs. It is very important to the globalizing world economy.
6. Some people think that the interest rateAre kept artificially low to buy from China and other Asian countries needs to enter the UK, especially the United States debt. If for some reason, this is the end. Increase in interest rates to try to address current account imbalances and the level of national savings.
7. Rise in oil prices. In the past two years, oil prices once again become the past, this is often enough to trigger a recession increase. This time was different, because the price rise is caused by the high demand forRather than supply-side shocks. However, if the oil price () continue to rise, many analysts predict oil prices will be on with the business cost pressures on inflation. In order to maintain the interest rate monetary policy, the Government's inflation target can be added. Therefore, the decline triggered AD
However, the British economic growth is projected at 3% next year. This is because consumer spending is a violation of low interest rates and low inflation forecast to remain stable. However, when theIs a slight increase in interest rates, growth rate may be too optimistic about (last year). This may be sufficient to reduce consumer and business confidence. Thus began a recession.
The United Kingdom and the United States into recession?
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