financial crisis, case uk

8/8/2019 financial crisis, case UK

1/23

Msc, Phd candidate Ilaman SHAGYLYJOV


2/23

0

1

2

3

4

5

6

7

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

%

Source: Bank of England, US Federal Reserve, ECB, HSBC

Bank of England

Policy interest rates:

European

Central Bank

US Federal Reserve


3/23

`A world in recession


4/23

` This has been the worst episode for theglobal economy since the 1930s


5/23

-8

-6

-4

-2

0

2

4

6

8

10

12

2007 2008 2009 2010

%

U r z *

Source: IMF, HSBC

* xcl d gW rld

l GDP gr wth


6/23

-4

-2

0

2

4

6

8

10

12

14

2007 2008 2009 2010

%

China India Malaysia Thailand Korea

Asia (excluding Japan)

Source: IMF, HSBC

Annual GDP growth


7/23

This has been the worst episode for the global

economy since the 1930s

Industrial production and international tradehave collapsed


8/23

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09

Ge any Japan

UK U

Indust ial p oduction

annual pe centage change

Source: Thomson Datastream


9/23

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Wo l t e volu esannual pe cent gechange

Source: WTO


10/23


11/23

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2004 2005 2006 2007 2008 2009

quarterlygrowth,

%

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

000s

Employment* (R axis)

GDP (L axis)

* Non-farm payrolls, average monthly change


12/23

-5

-4

-3

-2

-1

0

1

2

3

4

2007 2008 2009 2010

%

Germany France Italy Spain

AnnualGDP growth

Euro Area


13/23

34

38

42

46

50

54

58

62

66

2003 2004 2005 2006 2007 2008 2009

%b

alance

Manufacturing

Ser ices

expansion

contraction

Source: Markit


14/23

-2

-1

0

1

2

3

4

5

6

7

8

1988 1991 1994 1997 2000 2003 2006 2009

volu

e

o

le

nnua

l%

g

o

th

-35

-30

-25

-20

-15

-10

-5

0

5

10

inde

(lo

ng-run

verage=

-7)

Retail ale (Laxi )

Con u er con idence (Raxi )

Source: ONS, Thomson Datastream


15/23

Business surveys suggest that economic

activity is now contracting at a much slower

pace

Consumer spending isnt quite the disaster that

many had predicted

But unemployment has further to rise, andhouse prices further to fall


16/23

0.50

0.75

1.00

1.25

1.50

1.75

2004 2005 2006 2007 2008 2009

millio

ns

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

%

Claimant count (L axis)

Unemployment rate (R axis)

Source: ONS


17/23

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 2007 2008 2009

monthlymortgagea

pprovals,

00

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

35

%

Mortgage approvals (L axis)

Prices, annual change (R axis)

Prices, 3-month change annualized (R axis)

Source: Bank of England, Halifax


18/23

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009

annualrate,%

CPI headline rate

Inflation target

'Core' rate

Source: ONS


19/23

Bank Rate will be kept close to ero until well

into next year

The MPC believes that the risks from doing toomuch are less than the risks from doing too

little

Sterling has weakened, which is helping toboost the U s competitiveness


20/23


21/23

-5

-4

-3

-

-1

0

1

2

3

4

5

1998 1999 2000 2001 2002 2003 2004 2005 6 2007 2008 2009 2010

%

Long-term

average

U : annual GDP growth

Source: ONS


22/23

The recession will soon end, but the recovery

will be long and fragile

Without radical action it could take the bestpart of20 years before the public finances are

back to normal


23/23

financial crisis, case uk

Documents