Worst Recession Since The War

There is little grounds for comfort in the economy, with Ministers admitting that it could be the worst recession since the war.

On the surface it appears that the bust has come without any preceeding boom. Though, the economy still displayed aspects of boom and bust. See: Bust without boom?

It has led to a war of words between the German finance minister and the UK. The German minister criticised the UK for crass Keynesianism. Yet, he should perhaps concentrate on Germanys problems – high levels of public debt and their own recession. See: Germany v UK Economy

The continued weakness of the Pound is a reflection that the UK economy has been hit hardest by the global downturn. The UK economy has been hit the hardest mainly because:

1. Housing boom and bust is most noticeable in the UK. The UK is seeing rapidly falling house prices and house prices are traditionally very influential in influencing the UK economy.
2. The UK derives a large portion of its economy from the finance sector and this has been badly affected by global credit crunch
3. Domestic saving is very low, so with onset of rising unemployment and low expectations people are seeking to boost their savings and reduce borrowings.