The 2008 Financial Crisis

The Financial Crisis of 2008 saw the largest global recession since the Great Depression (1930s). The recession lead to extremely high levels of unemployment and scarily high levels of home foreclosure.

The great recession had many causes and was looming for many years before 2008. Many people still wonder why banks didn’t prepare for or try to prevent the recession when they had the chance. The crisis is the product of supply driven market pushed to its limits and failed. The causes of the crisis range from house mortgages to trade.

The UK suffered terribly from the crisis. This is because the UK’s economy is built on real estate, retail and financial services. These three services were hit the hardest during the ripple of the crash. This proved to have many negative long term effects on the UK. In January 2008, the FTSE 100 fell by 5.5%. This was the biggest loss since the crash of September 11, 2001. Then people started to stuggle to pay mortgages because of unemployement. This directly correlated to a decrease in retail sales.

In an attempt to stimulate growth, the government cut the rate for VAT in November 2008. However, by that time house prices had fallen by 10.5%. Between January and December, the FTSE 100 had dropped by 31.3%. It was the biggest annual fall since its inception in 1984. Following six consecutive quarters of negative growth, the UK economy finally moved out of recession in the last quarter of 2009.