Economics - to develop an understanding of what has happened in the Essay

Economics - to develop an understanding of what has happened in the economy of the United Kingdom over the last two years - Essay Example eported the gross domestic product rose by 0.2 percent in the quarter ending June 30th, which brought down the annual GDP rate to 1.6 percent from 2.3 percent in the first quarter this year (Duncan, 2008). United Kingdom is one of the most developed countries in the world and has made a mark for itself throughout the world. United Kingdom comprises of England, Wales, Scotland and Ireland. The capital of England London is rated as the world’s most expensive city. According to Professor Bean’s (Bank of England chief) bleak assessment, the United Kingdom has seen an undisturbed and unbroken expansion for over sixteen years and as mentioned earlier the country is starting to face recession. Almost every country has been facing an economic slowdown since the market crash in 1970s however there have been strong efforts from almost every economy to ensure the economies get back into stable positions. United Kingdoms has held the fifth position in the global economies however the risk of the recession since the 1990s is now growing for the country and the living costs are also growing along with this. This has made it difficult for the Bank of England to cut down the interest ra tes and is causing a lot of issues with the Labour governments’ handling the economy as the public is extremely dissatisfied with the growing interest rates (Reuters, 2008). It has been noted by economist James Knightley at ING that the growing credit crunch and the rising food and energy prices is disrupting the growth of the country and there is no solution to this by the fiscal and monetary policies. This slowdown was triggered by the biggest drop in the construction sector during 2005. This resulted in a drop in the decline in the building industry which converted the decade long housing boom into slums. The government however did its bit by contributing to the infrastructure projects which helped the industry stabilise and get back into action. The service sector contributes to almost