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Table of Contents:
Introduction…………………………………………………………………………….…….………………….2
Conclusion……………………….……………………………………………..………………………………13
References……………………….…………………………………………..…………………………………14
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The UK Current Economic Conditions September 8, 2010
I. Introduction:
Since in 1992, the Britain's economy enjoyed the longest period of development on
record. In 2008, however, the global financial crisis hit, mostly harder, the UK
economy, due to the significance of its financial sector. The financial crisis started
in 2008, and it been consider as the biggest economic collapse since the world wide
war II, and the great depression of 1929.
During 2008, The GDP growth rate was -7%, and the prices inflation had reached
5.3% and the unemployment stood at 8.5. That resulted in UK economic growth
decline by -4.1 in 2009.
To reduce the destruction of the crisis, the government has attempted different
methods and strategies. Such as, providing assurance for people and planning to
restore consumer and business confidence and shore up employment and letting
banks leading again. The government also put the interest rate at 0.5%. In the late
2009, the depression was expected to end in the last quarter of 2009. The analyses and the
forecasts conclude that 2010 will be year for an economical recovery.
So is 2010 a year of an economical recovery, or is it just another recession year? Did the UK
economy have moved one step forward or backward, in 2010?
This case study will discuss the current economic situation of The United Kingdom
and the effect of this economic situation on the price, demand and supply of some
consumer goods. And the case study will end with a clear answer for the previous
questions.
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The UK Current Economic Conditions September 8, 2010
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The UK Current Economic Conditions September 8, 2010
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The UK Current Economic Conditions September 8, 2010
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The UK Current Economic Conditions September 8, 2010
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The UK Current Economic Conditions September 8, 2010
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The UK Current Economic Conditions September 8, 2010
Even though, consumers became more confident about their personal financial situation and the
general economy during 2010, they were less confident about making major purchases.
B. Review:
This paper discussed some of the UK economical indicators in 2010, whereby the GDP had
strongly increased by 1.2%, but also the unemployment had rose to stand 8%. In addition, the
inflation rate increase sharply to reach 3.1, plus the interest rate had been cut to become 0.5%.
That resulted in the decline of Pound. In first quarter of 2010, the UK current account had
decline by 9 Billion Pound.
Influenced by these, the UK weekly earning average had decline 1.3% and the costumer/
business confidence in 2010 remains similar to May 2009.
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The UK Current Economic Conditions September 8, 2010
The demand and supply curve are been influence by many factors, among these factors are; the
current situation of a country, the income of the consumers, and the expected future prices.
The UK economic condition in 2010 had a deep impact on the demand and supply of some
goods and service. These impacts were either in the interest of suppliers or in the interest of
consumers. Among these produces that seen a changes in its demand and supply curve are; the
Food products, Used Vehicles, Oil, and houses,
1. corn
I. The Demand & supply of corn
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The UK Current Economic Conditions September 8, 2010
started protesting against this price rise. Experts believe that cheap corn is history, because of
unavailable substitute for corn.
2. Houses in UK:
However, the supply of houses was way below demand. The gap between supply and demand
will keep on increasing, unless the government started building 39,000 houses per year according
to Experts. That decline in supply resulted by the cut in government’s expenditure in 2009/2010,
The increasing the demand on houses had resulted in the drop in the houses prices. The average
cost of a home dropped by 0.9% to £158,300. Sellers are also getting a lower proportion of their
asking price, since the average house price is undervaluation of around 20 % in 2010
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The UK Current Economic Conditions September 8, 2010
The demand for oil rise sharply this year, according to The International Energy Agency. In
addition, the oil demand in UK is 2% higher than last year. Meanwhile, OPEC is started cutting
its supply as a strategy to protect the current price from drop again.
Crude oil prices have risen by about 30% this year to levels not seen since the early 1980s. The
UK-traded Brent crude from the North Sea rose to $55 a barrel. The reasons behind this are:
a- The rising demand: the UK economic expansion is driving what the International Energy
Agency says is the biggest increase in oil demand for 24 years.
b- The low stocks: Oil companies have tried to become more efficient in recent years and
operate with lower stocks of crude oil, which meanly been influenced by OPEC.
Oil process in
2010
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The UK Current Economic Conditions September 8, 2010
Second-hand cars are gaining value rather than depreciating in the value due to a shortage in
supply, and the increasing demand. According to CAP Motor Research Ltd the average family
car has increased in value by about £600 in 2010.
IV. Conclusion
The UK economy appear to be on the path to gravel recovery, but it will take a long time before
the GDP growth and the high unemployment rates returns to per crisis levels. In 2010, the GDP
growth had barely reached 1.2%, and the unemployment rate unexpectedly rose to 8.1%. In
addition, cutting the interest rates to 0.5% resulted in the decline of the pound, and as a result of
the low value Pound the inflation rose up to around 3.4%. The high inflation arte pushed the
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The UK Current Economic Conditions September 8, 2010
prices of many consumers’ goods. Also since the low consumers’ confidence, consumers
spending remains relatively subdued growing by 0.5.
Consumers’ goods such as corn, used cars, oil and houses, as the paper analyzed, have seen an
increase in demand and generally shortage and supply, that resulted in a risen of the price of
some consumers’ goods.
So the Economic recovery may seem to be delayed until 2011, since the risk to suffer from a
recession again, appear to be close and acceptable now. 2010 is a difficult year for the UK
economy, after the deepest recession since the 1930s; the outlook is for a slow and small
recovery, merged with the high unemployment, the government borrowing and the deficit of 9.6
billion in the UK current account.
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