The Recession In The Banking Industry Business Essay

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For my structure I will look at the introduction which contains the background of the British Economy and the development of the recession, then the body which includes my research findings and the effects of the recession on British economy and then the conclusion which shows if the recession has affected British or not.

Recession is a period of time in the business cycle when the economy suffers form economic downturn. When this happens the GDP( Gross Domestic Product) of the economy falls for 2 quarters the country officially enters a recession. During recession government respond to it by adopting new policies like, increase in government spending and decrease in taxation.

In 1979 the British economy suffered a decline caused by inflation, a fall in purchasing value of money, the inflammation was under control, the government adopted a monetarist approach to try and make efforts to deal with the different economic problem in UK by decreasing the inflation.

In 2008 UK suffered another recession, this time it's was a result of the collapse of the UK mortgage marked. The government put in place a lot of strategies to recovery in 2008 but in 2011 UK went into another recession mainly a result of the impact of government cuts.

Recession can be caused by unemployment, High cost in borrowing, fall in demand, low in investment, inflation, low output.



Research Methods: There are four methods of research which are Primary research, secondary research, Qualitative research and Quantitative research.

Primary Research is the research done by one-self to get your own information, such as one to one interview, Observation, survey, questionnaire, focus group. The positive side of me using primary search is that i can gather information which has not be used or seen by anyone, I can also get a tangible answers because it is one to one, and my subject can feel free to answer all my question without been intimidated and also see the way people respond to questions. The negative side of primary research is that it is very costly and time effect because you have to travel to interview some mangers and I have to consider the ethical procedures.

For my Primary research I will be using Questionnaires and one to one interview and I have to book appointments with business managers,I will also visit the nearby corner in my house and interview the owner Clare.

The main advantages of using primary research is that I have the opportunity to ask some specific questions and also the chance for me to go anywhere to give out my questionnaires and how many people I need to answer the questionnaires.

The disadvantages of using primary research is that I have to spend a lot of time booking appointments because some companies do not reply on time and some do not even reply, this research method is expensive because ei have to travel to places to interview people.

Secondary Research is the information you get from other sources such as the internet, books, report, articles. This research method is cost effective and saves time compared to primary research.

The disadvantages of using secondary research are that some information can be old and has not been upgraded for a long time and some information might not be focusing on the right issue at hand.

The advantages of me using secondary research is that its time effective, I can stay at home, do my research anywhere at any time and I can also do other thing while doing my secondary research, the most important aspect of this method of research is that I can collect a lot of information about the recession on the British economy on different site and compare them together

Qualitative Research: This method of research is all about what attracts customers to buy things from your business. Questionnaires can be used for this method of research or a Yes/No answers. this method of research is used to find out what customers personal thinks about a business and service, business can use this method to find out information from customers when they have new product out in the market, the main reason that I decided to use this method of research is for me to find out what the general people, public and organisation thinks about the recession, the government cuts and the effects

All these methods would be used to gather and analyse information from all the sectors of this economy, such as primary, secondary and tertiary. The method research I used for this assignment is primary which is questionnaire and secondary which is the external source (internet). I have chosen to use these three methods because they are very effective and I can be accurate as I will be using both system to evaluate and analysing my result.

Research Procedures

This section is for me to evaluate the strength, limitations of my research and procedures, and for me to suggest improvement on British economy.

Research Procedures are the way I am going to conduct my research, which I will be mention the ethical consideration I took.

Research Procedures: for me to be ethical considerate, I have to be aware of some questions which might sound wrong to my subjects while preparing my questionnaires and also for me to know how to put my question in a right sentence. After setting my questionnaires I have to show it to my tutors in other for her to check it or many changes. I have decided to go to the High Street to give out my questionnaires to people and also ask one to one questions, before I give out my questionnaires to anybody, I will first ask if they can give me just 3 minutes of their time to answer some few questions for and if any says yes then I can give them the questions then I will introduce myself and the purpose of the questionnaire.


Limitations are things that normal happen when doing a report, firstly when I was doing my questionnaires I could not ask some kind of questions because I do not want my subject to feel discriminated or feel bad, that limited me to gather some effective answers for my report. I was also had problem with my business aspect of my research because it was hard for me to book appointment with managers and when I finally booked appointment, they were cancelled many times

On the secondary research, the negative side was that I had to visit a lot of website to get the right and updated information, after that I had to read through everything to make sure the information was what I was really looking for and while for primary research was very easy because the answers were coming direct from people who has been affected by the recession.


The strength about the questionnaires aspect of it, its gave me to chance to ask various types of questions, also to get the people`s different view and opinions about the recession and the effects it has on them as an individuals.

In my secondary method, information was a bit easy for me to get and gather because I had a lot of information source as such websites, newspapers, journals and books. While Qualitative Research

Some examples of businesses in Primary, secondary and Tertiary sectors


Primary is when a business produce raw material that has not been process

London mining


Colchester Oyster Fishery Limited

London mining is located in Nation house, 103 wigmore street, London, W1U 1QS

London mining: Is focused on identifying, developing and operating mines to become a significant producer of Iron Ore

BP is located in first jame's square, London, SW1Y 4PD

BP: Are into finding, extracting and refining oil and gas, to developing advance biofuels.

Colchester Oyster Fishery Limited is located in Pyefleet Quay, Mersea Island, Colchester Essex, CO5 8UN.

Colchester Oyster Fishery: Are into supplying of quality fresh shellfish to wholesalers


Secondary are the businesses that are involved in manufacturing and refining raw material



Mr Bagels

Vauxhall is located in Griffin House, Osborne Road, Luton, Bedfordshire, LU1 3YT

Vauxhall: are into manufacturing of cars and van

Unilever is located in 100 Victoria Embankment, London, EC4Y ODY

Unilever: Is one of the world's leading suppliers of fast-moving consumer goods. Here are some recent highlights from our three global divisions - Foods, home care and personal care.

Mr Bagels is located in Ozel House 52-54 White Post Lane, London, E9 5EN.

Mr Bagels: Are into manufacturing bagels and they are a major supplier to retailer's food services Company and sandwich distributors in the UK and Europe.


Tertiary is the business that offer support to primary and secondary

Lloyds TSB

Royal Mail

Tower Hamlet Council

Lloyds TSB Bank PLC is located in Victoria Street, London, SW1E 5JL.

Lloyds TSB: Provide financial service to individual and companies.

Royal Mail is located in Farringdon Road, London, EC1A 1BB.

Royal Mail: Provide quality service to the public, improving safety and productivities across business through their world class mail program.

Tower Hamlets Council is located in Town Hall Mulberry Place, 5 Clove Crescent, E14 2BG.

Tower Hamlets Council: They provide help and improve the life style of the people in the community.

Chapter 4

In this chapter I will be talking about the British Economy background and the development of the recession in different sectors of the economy, the Primary sector, secondary sector and Tertiary. I will also relate research theories and its importance to my findings and interpret data and figures to support my findings; I will also suggest solutions that I think can help solve the problems.

The British economy was officially proven to be in a recession in January 2009, when the Office for National Statistics (ONS) announcement of the preliminary estimate of gross domestic product (GDP) - a standard measure of the total value of a country's output of goods and services - to has fallen of 1.5 per cent in the last three months of 2008 after a 0.6 per cent drop in the previous quarter, in June 2009, British economy was around 5.5percent down its peak in the first 6 months of the year 2008 before the recession started.

The economy in the United Kingdom has been greatly affected by the recent recession and financial crisis. Changes in consumer preferences Were observed, the income of families declined, and unemployment increased.

The financial crisis has increased uncertainty in the 'real economy' and higher uncertainty has led firms to postpone making Investment and hiring decisions but the longer the firms wait, the more Economic activity slows down.

Employment is falling much faster than output in the UK recession. This may be because information technology and aggressive management practices are allowing firms to cut staffs and also the introduction of new practices that keep output high and Productivity tends fell in the early stages of a recession but rebounds as weaker firms close.

The financial crisis has increased uncertainty in the 'real economy' and higher uncertainty has led firms to postpone making Investment and hiring decisions but he longer firms wait, the more Economic activity will slow down.

House prices may fall for three more years. With fewer houses on the market, potential buyers know that it will be harder to find a house that matches their tastes or needs - so more buyers dropout of the market, leading to further declines in prices.

During Recession Banks make money on the interest rate spread between what banks pay to get capital and what banks receive on the loans that bank gives out. During recession this spread becomes very big or large in which the fed lowers short term rates and most bank loans are long term so that they do not fall as much in the recession.

General Bank makes good earning during recession but recession also lowers the demand for loans so banks might not be able to loan out the maximum that the banks wanted, but more important some of their existing loans may default, Because of the current high risk of defaults on mortgage loans, banks profitability will depend on their portfolio of loans, so it is not possible to generalize to all banks. The last recessions produced an extremely profitable period for banks due to Fed funds rate enabled Banks to borrow under 2%, and most of the financial problems were in the stock market and not loans.

The Recession in the banking industry has adversely affected the cash flow for the industries. When industries cannot raise funds for their expansion or operation then the industrial output would come down. This in turn would affect the GDP of the nation or country. It may affect the employment situation in the country also in which banks has to cut off some staffs from working