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Who actually controls the UK economy?

Over the last two years we have seen the UK government introduced a number of measures to try and inject more life into the UK economy and indeed bring the country out of recession. Even though the indications are that the UK economy will leave recession in the final quarter of 2009, many people are puzzled as to why it has taken so long for these financial initiatives from the authorities to actually kick in. So who is actually in control of the UK economy?

The truth is that the UK economy is an animal with a mind of its own which is influenced by consumers, businesses, worldwide market conditions and the UK government. While the UK government has the potential to inject money into the economy, make debt more expensive to cool the boom times and introduce a number of initiatives, each element of the UK economy needs to be involved to move the economy in any particular direction. If for example the UK government injects capital into the system but businesses do not use this additional capital then the effect would be minimal.

For many years, under traditional recessionary scenarios, a simple movement in UK base rates, to either make debt less expensive or more expensive, has in many cases done the trick. However the latest recession is very different and was basically more damaging than any in recent history pure and simply because it cut off the money supply to the worldwide market.

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