recession

What happens to value of currency during recession?

What happens to value of currency during recession?

Readers Question: What will happen to the value of a currency during times of deep recession and high inflation? There is no hard and fast rule about what will happen to the value of a currency during a deep recession. For example, when the great recession started in 2008, the UK experienced a significant depreciation. The Pound Sterling fell nearly 20% from 2007 (before the start of the great recession) to July 2009 But the Euro and Dollar were less affected by the…

The recession is over but not the depression

The recession is over but not the depression

Some thought provoking analysis from NIESR. Firstly, they define recession and depression in an interesting way. Recession – a period of time where output is falling. Depression – The period of time where output is below it’s peak. The UK economy is now growing, at a decent pace (0.8% in Q3). However, output is still significantly below the old 2008 peak. This means that the recession is over. But, with output still below the 2008 peak, the prolonged period of depression is still not over, according to this definition. Also, if we compare…

The depth of the European recession

The depth of the European recession

Interesting graph which shows the depth of the EU recession compared to the great depression of the 1930s. Source stats | via Krugman UK recession compared This graph is from the start of 2013. Since, then the UK economy is showing signs of  picking up. But, it is still worth bearing in mind the length of the decline in GDP since the start of the recession.

The great recession 2008-13

The great recession 2008-13

The great recession refers to the period of economic downturn between 2008 and 2013. The recession began after the 2007/08 global credit crunch and has led to a prolonged period of low growth and rising unemployment. In particular, the great recession highlighted problems within the Eurozone and, unlike the US, Europe has experienced a double dip recession. The main causes of the great recession involve: Credit crunch and fall in bank lending. Fall in confidence resulting from the financial instability. Fall in exports from global recession Collapse in housing markets leading to negative wealth…

Triple Dip Recession in UK Likely

Triple Dip Recession in UK Likely

Unfortunately, despite the post-Olympic bounce in GDP, other aspects of the UK economy look pretty grim. In manufacturing and industrial output, there has been no real recovery. In manufacturing it is not so much a triple dip recession – more a prolonged double dip. Manufacturing output is  2.1 per cent lower in October 2012 compared with October 2011; Source: ONS Looking at data since 2007, we see a similar pattern to GDP.

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Triple Recession Could Lead to Lower Credit Rating

Recently, a report suggested austerity can increase debt levels. Now, there is an indication that austerity could cause a decline in credit ratings. This has certainly been the experience of many European countries – who since they introduced austerity measures – have seen a reduction in their credit rating. Austerity hawks have often sold immediate spending cuts on the grounds that if we don’t tackle the deficit, we will lose our precious AAA credit rating. But, austerity measures which worsen the recession, could make the credit downgrade even more…

How Long Do Recessions Last?

How Long Do Recessions Last?

Readers Question: How Long do Recessions last? There is no exact answer. Recessions can last for varying time lengths depending on the causes and also the response of governments and consumers. If recessions are caused by a tightening of monetary policy (higher interest rates to reduce inflation) then it tends to be easier to get out of a recession, as the interest rate rise can be reversed and this will boost demand. If the recession is more of a balance sheet recession (bad debts, falling asset prices, bank losses) then the…

Define Recession

Define Recession

Definition of recession. In the UK a recession is a period of negative economic growth for two consecutive quarters. This means there is a fall in National Output and National Income. Inevitably a recession will involve higher unemployment and an increase in government borrowing. This diagram shows that there was a recession in 1981, 1991 and 2008-09. During these periods the UK experienced negative economic growth (fall in Real GDP) Definition of Depression A depression is considered to be a much more serious recession….