UK economy, financial crisis, financial crash, banking sector, UK government, deregulation, financial markets, Brexit, eurozone
Ten years ago the world economies were hit by the financial crash which exposed countries of their weakness and almost collapsed some of the biggest banks in the world. The crash exposed the weakness of banks their reserves held were less than 1% of equity well below a level that could potentially close them down if governments did not come to their aid to keep them afloat.
The irresponsible lending and inflated bubble finally burst causing the financial crisis of 2007/2008 that effected countries across the world including the UK.
The UK saw three banks needing government bailouts or this would have caused a meltdown in the banking sector which in turns affects the economy in growth and customer spending. House prices in the UK dropped rapidly over this period that left home owners in negative equality. The UK has recovered slightly over the 10 years on from the financial crisis and showing signs of poor growth this year 2019 this largely has to do with BREXIT and the uncertainty as a no deal has become more likely due to parliament not being able to agree on what deal the UK should have when it leaves the European Union on October 30, 2019. Markets do not like uncertainties as business are reluctant to plan/invest which in turn slows growth.
[...] Penguin Books Read,C. (2009). Global Financial Meltdown.Palgrave Macmillan Young,A (2016). Understanding the Financial Crisis of 2008.Amazon Bayoumi,T. (2017). Unfinished Business.T J International Ltd.Padstow.Cornwall Buckley, A. (2011).Financial Crisis Causes, context and cosequences.Pearson.Essex Farlow, A. (2013).Crash and Beyond,Causes and Consequences of the Global Financial Crisis.Oxford .Oxford University Press Internet https://www.theguardian.com/business/2017/feb/21/we-will-miss-the-next-financial-crisis-predicts-bank-of-england Accessed 15/07/17 http://www.cityam.com/277830/imf-says-uk-economic-growth-remain-flat-2018-brexit-creates Accessed 05/01/18 https://www.ft.com/content/0271a93e-81ee-11e7-a4ce-15b2513cb3ff Accessed 10/08/18 https://www.ecb.europa.eu/press/key/date/2009/html/sp091016_1.en.html Accessed 27/05/19 https://obr.uk/box/the-governments-regulatory-response-to-the-financial-crisis Accessed 25/06/19 https://www.reuters.com/article/us-iif-crisis/banks-ignored-warning-signs-says-iif-chairman-idUSN1730993320080717 Accessed 29/05/19 Journal Articles Hinmoor,McConnell.2013.Why didn't They see it coming? [...]
[...] Bayoum 2017 "The cross- Atlantic Financial Drift "saw the US booming market financed by the Euro area banks. Although the rules were updated at the end of the 20th century to be more update from the depression period, the rules changed to favour the banks which saw increased profits. This self-interest regulation of rules in the banking industry becomes apparent when the financial crisis began to unravel. Deregulation in the USA started in the 80's saw most of the legalisation that was put in place in the 1930s removed which in turn saw an increased growth in banks. [...]
[...] Financial Industry should not be allowed to self-regulate without an over view from central banks. Summary of the Literature Review Deregulation played a major part in contributing to the last financial crisis, the industry become complacent and made assumption that houses markets across the world would keep raising there by levying higher risk capital fuelled by risky lending due to the Accounting policy changes that came into effect in the USA. References: Books Keen,S.(2017). Can we avoid another financial crisis? Cambridge. Polity Press Wolf, M. (2014).The Shifts and The Shocks.London. [...]
[...] The UK government responses to the financial crisis, UK Regulation on the banking sector after the 2007/2008 crisis After the crisis The Bank of England put in place measures to cope for any bank that fails in the UK. The Financial Policy Committee (FPC) was established in 2013 by the Bank of England which has the responsibility to identify, monitor and mitigate "risks to financial stability, with the aim of ensuring that regulator take a holistic approach to safeguard financial stability" . Brexit and the Impact on a future financial crisis Economy that are inter twined like the UK and the European Commission have the ability to send shocks waves across the world. [...]
[...] Indicators may not be enough to predict the next financial crisis as the current model is not good enough according to monetary policy committee that the model was not flawless so it is difficult to provide the UK economy with a forecast. Wolf (2014) stated that "an economic system is too complex for a precise predication of the timing of a crisis" Warning Signs of the financial crisis ignored Over the years different scholars have various theories on why the warning signs were ignored. [...]
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