2008 Financial Crisis---Summary

2008 Financial crisis impact on UK such as never previously existed. The continuously worsen situation led UK’s government and Bank of England substantially hard to guard against the wave of the economic recession. A new tide of trade protectionism, government financial rescue policies and incentive economy plan cannot effectively prevent economy in a short term from continuing to deteriorate.

After the research, I draw this figure 7 below to show the relationship between parts of the main financial crisis factors as a summary.
         Figure 7: The process of a vicious circle during recession

In conclusion, as financial crisis started in the beginning of 2008, sterling exchange rate depreciated more than 7000 points until end of 2009, which affected the trading of both exports and imports more than 20%, while imports and exports were both decreasing that we can easier to understand that many firms would receive less and less orders which in turn caused firms to layoff staffs or even have to en-fronting the possibility of go to bankruptcy. After that, unemployment rate increased sharply typically around those 18-24 young people group, when people lost their jobs, they started to cut spending and could not afford the high mortgage loan. Borrowers were facing the situation of defaulting the contracts. Banks and mortgage intermediary unable to suffer the loss either. Some banks have to ask for help from the government who agreed to conduct bailout plans, nationalizing by buying their stock and also use monetary policy of quantitative easing to save the market. As government try to rescue the banks and house agents, investors have already doubt UK’s economy strength and do not have enough confidence to invest in UK, since then financial crisis would go through such a long series to recover.