Uk ressition

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Amity Business School

• PRESENTATION ON
• UK Recession

SUBMITTED BY- NAVNEE KUMAR AKASH
YADAV CHAITANYA NANDA ADITYA FASWAL RAHUL KUMAR
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Overview of UK Recession 2022

• Brexit
• When U.K decided that it would no longer be a
  part of European nation because of they faced
  supply chain problem and labor shortage.
• Covid Pandemic
• The globally supply chains were disturbed and
  Brexit hasnt gone away .
• Due to factory closer the GDP rate was declined
  and there was a party scandal also .

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Overview of UK Recession 2022 contd.

• Minister policies and frequently changing
  Ministers
• Policies that were implemented by ministers were
  not creating any impact on the economy.
• Ex The policies introduced by Former PM Liz
  Truss.
• The idea was to use trickle-down economics. As
  soon as she announced this plan, the value of the
  British Pound, fell down drastically.
• Impact of Russia and Ukraine war
• The raw material import and export are banned
  which lead to increase of price raw material due
  to this inflation rise at 9.9 and recession
  increases.

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The UKs economy sliding into recession

• UK GDP fell 0.2 between July and September,
  ending five consecutive quarters of growth.
• The United Kingdom is the only G7 economy to have
  contracted in the third quarter and is now 0.4
  smaller than it was at the end of 2019, before
  the coronavirus pandemic began.
• It is due to cost push factor, not strong demand.
  Therefore, prices are going up, but real wages
  are not. In fact, workers are struggling to keep
  wage growth up with inflation, causing the
  sharpest fall in real income for two decades.

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Key Factors for the rapid downfall

• COVID 19
• Ukrainian war
• Interest rate rises
• Energy prices
• Cost of living
• Labour market shortages
• UK economic performance and economic growth has
  fallen behind the post-war trend.
• Weak levels of investment from both the private
  sector and the public sector. There are
  shortfalls in housing, transport and the
  development of new technologies in
  manufacturing. 
• Brexit. - Brexit has been the depreciation in the
  value of the Pound
• The weaker pound has left UK households poorer by
  increasing the cost of imports, resulting in
  higher inflation and lower real wage growth. The
  International Economic Review estimates that
  Brexit has increased consumer prices by 2.9

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What went wrong?
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• Prime Minister Liz Truss took the British economy
  and put the nation on a
• path to long-term success. This plan back
  fire.
• Mortgage rates soared and chaos in bond markets
  threatened the countrys financial stability.
• UK govt .facing a cost-of-living crisis, the war
  in Ukraine and the lingering effects of the
  COVID-19 pandemic .
• Governments ability to pay its bills and raised
  questions about the economic That was undermined
  confidence .
• Truss predecessor, Boris Johnson, was forced out
  of office after a series of scandals .
• Treasury chief Kwasi Kwarteng on Sept. 23
  announced plans to cut taxes by 45 billion
  pounds, while reducing red tape and promoting
  investment to spur economic growth.
• The governments goal is to boost economic growth
  to an average of 2.5 annually, provide more
  money for public services.

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Contd.
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• Kwarteng didnt provide any independent analysis
  of whether the governments goal was likely to be
  achieved or its impact on public finances.
• In the meantime, the government is likely to face
  political pressure to reverse some of its more
  controversial proposals.
• Truss canceled plans to cut taxes for high
  earners amid a backlash from members of her own
  party. After it was too late to realize as
  market/economy started to decline by the time.

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Now, what is the solution???
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• Now the major question arises that, how Mr. Rishi
  Sunak will address multiple economical and
  political crises in UK.
• He also set out higher public spending but
  simultaneously promised more discipline and to
  cut waste.
• Sunak's campaign launch statement he wanted to
  "fix our economy, unite our party and deliver for
  our country.
• As a finance minister , b/w 2020-22 he sat out
  higher public spending but simultaneously
  promised more discipline and to cut waste , he
  also planned to cut down income tax from 20 to
  16 by 2029.
• Sunak has backed the independence of the Bank of
  England and working alongside the central bank to
  tame inflation.

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Consequences of UK Recession 2022

• When is recession expected to hit?
• 5 Quarters recession.
• Economy output decline.
• Households and business will be feeling poorer.
• Inflation highest in 40 years.
• Price of essential goods high 54 from April 2022.

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Cost of borrowing and mortgages. UK 2008
unemployment increased by 10. Value of Pound to
INR. Advice for people in the UK.
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CONCLUSION
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• After suffering from various incidents in past
  few years, Uks economy began to shrunk.
• Former prime minister Liz Truss
  methodologies towards ecomony was somewhat
  correct but the strategies was not upto the mark.
  
• After being 6th largest economy in the world
  , having wrong people in the cabinet can break
  everything.

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.
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• Country was already facing issues because of
  ukraine and Russia war and COVID -19 pandemic in
  the middle of all these things mortgage rates
  soared which created a chaos in bond market and
  thus countrys financial stability was
  threatened.
• Liz Truss faced backlash from the members of her
  own party because of her controversial proposal.
  When Truss realised her mistake the economy was
  already declining by that time.
• After Truss , Mr. Rishi sunak hold the command
  of UK. He promised UK that his party will bring
  the economy to the top again by their policies
  and actions.