Economic Performance of UK Coursework Example | Topics and Well Written Essays - 1500 words

Economic Performance of UK - Coursework ExampleUKs economy is experiencing slower ontogeny as during 2007, it put down a real GDP growth of 3.1% however, and the same has been recorded at 1.0% due to sharp increase in inflation. (Economist.com 2008). UKs inflation touched 3.8% in 2008 whereas its cypher balance alike widened to negative 3.8% suggesting the fact that all is not well for the UK economy.Many critics believed that in stage to arrest the rising inflationary trends in the country, the pecuniary authorities in the country shall increase divert rates whereas some believed that in order to reduce the impact of recession, UKs monetary authorities shall lower interest rates so that economy can be put on right track.This paper will discuss both the options i.e. increasing or fall the interest rates to control inflation or avoid recession and will present a comprehensive analysis of both the options in order to provide a conclusive recommendation of which option to exercis e.The economy of UK is second largest economy in EU after Germany and fifth largest economy in the world. ... The bring up economic indicators suggested improvement as UK economy thrived on increasing consumer spending however, due to increasing spending UK economy witnessed growing increase in its consumer terms index.IMF, during 2007, revised its economic forecasts for the UK economy due to its improved performance and termed it impressive as during last five years i.e. 2003 to 2007, it recorded an average real growth rate of 2.8%. (BBC.com 2007). The economic growth however is mostly dominated by the service sector with major contribution being made by pecuniary services, food chains, healthcare as well as real estate. Further, the Agriculture sector is as well as significantly contributing towards the GDP of the country as it meets or so 60% food demand of the country. (Economywatch.com 2008)It is also however important to note that the performance of GBP Pound sterling is also declining over the past few years, in the first place due to strong performance of Euro against major currencies and the fact that most of the trade within EU region is dominated by Euro. The recent developments, especially in the later half of the year 2008 however suggest that all is not well with UKs economy as it is experiencing serious challenges ahead due to the spread of subprime mortgage crises originating from US.The housing sector in UK thrived on the loose regulatory environment which allowed lenders to make lending into areas which were not considered as bankable under normal circumstances. UK also experienced the same economic bubble in its housing sector as not only the prices of the housing units dramatically increased but also the overall flow of credit to the housing sector increased too. This not only made bankers