Monetary And Fiscal Policies And Weighing Up How Effective The Coalition Have Been Improving The British Economy

1491 WordsJan 13, 20166 Pages
In this essay I will be examining how the financial crisis in 2008 caused the UK government to change their aims and policies to aid recovery. I will be looking to both monetary and fiscal policies and weighing up how effective the Coalition have been in improving the British economy. I will be comparing the aims and policies to those of other countries and evaluating what has restricted the UK economy from growing. The global credit crunch of 2007-2008 had a rippling effect on economies worldwide and was considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. The crisis was mainly caused by the increased use of high risk, complex financial products (mainly subprime mortgages) to give lower-income borrowers the opportunity to become homeowners. These subprime mortgages were provided by banks on the belief that house prices would continue to escalate, however excessive borrowing and the lack of transparency involved led to a bubble in the housing market and the eventual collapse of housing prices. The crisis resulted in several high profile financial institutions requiring bailouts from their retrospective governments, including Northern Rock in the UK and Fannie Mae in the USA. Northern Rock were nationalised in 2008 as a result of the subprime mortgage crisis and liquidity problems. The new UK government would soon need to adjust their policies in order to recover from the crisis. In the aftermath of the financial crisis,

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