Overview of United Kingdom Economy

The United Kingdom is considered as a major capitalistic economy which is developed. The economy of United Kingdom is the 3rd largest in Europe.

It is mainly after the World War I that the country was massively in debts and the World War II forced the British Empire to borrow more so that they could finance the defense.

The United Kingdom economy during those days was far behind the other countries in Europe because of this heavy debt load.

Problems faced by UK Economy:

There numerous problems that are being faced by the United Kingdom economy. Even though the country has had economic growth for years however the government is still borrowing thereby breaching their own limit which is 3% of the overall GDP.

Because of this there is no scope for expansion in terms of fiscal policy. Another problem is the housing market. Today the houses in UK are overvalued to take care of the economy however if they were to decline it would definitely have a negative impact on the economy of United Kingdom. Inflation is also a reason to worry about in the UK as they predict that the oil and energy prices will increase which might affect the economy.

Recent Performance of the economy:

Due to such problems the United Kingdom entered Recession in the second quarter of 2008 and exited in the fourth quarter of 2009 which makes up to six quarters of bad growth. The United Kingdom economy had reduced by 4.9% during November 2009. Due to this the year 2008-2009 was considered the longest which was hit by recession.

However during December 2009, the statistics reported a reduction of just 0.2% compared to previous quarter wherein the reduction was 0.6%. In the last three months i.e. from December 2009 to February 2010 the UK economy grew by 0.4%.