There were two periods when the UK had strong economic growth. The first period came at the time of the Prime Ministership of Margaret Thatcher and the second period came when the ‘New Labour’ government came to power in 1997 .


From 2001 to 2007 the United Kingdom experienced the great economic growth in both housing and stock markets. At this time there were regulation lax, rules broken and credit was cheap and easy. Since the price of houses was tripled so London Stock Exchange reached records high. In the third quarter of 2007 the home prices were in peak and the long decline set in. Because of not getting wholesale funding there was pressure in the UK bank Northern Rock to turn to the bank of England as lender of last resort in September 2007. Due to this the British government was forced to nationalize the bank.

Northern Rock did not spot the end of involvement of British government in the financial sector. They were forced to provide funding, capital and underwriting worth more than 400 billion GBP to the stronger groups and big over-leveraged giants like RBS, Lloyds TSB, Barclays, HSBC and Standard Chartered.

By the second quarter of 2008 the UK economy was officially in recession and there was a drop of more than 30% in Sterling against the other currencies. The UK economy was already in recession because of the rise in unemployment and consumer confidence dropping, so the next victims were auto and retail sectors.

The British economy continued to decline in 2009 at an even faster rate than originally expected. There were no sectors of the UK economy who were struggling with consumer confidence, the housing market manufacturing and employment either at the minimum point or dropping faster than ever before recorded. In the end of the year 2009 the economy of UK is expected to have shrink 3.2% with the rise in UK public debt to a staggering 70%.

The forecasting of the UK economy in 2010 is also uncertain. According to the consensus for 2010 the growth of the economy has shifted to negative: i.e. it ranges from o% to -5%.

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