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Why is the UK economy still struggling?

Today we saw Denmark leave recession in the third quarter, something which has again highlighted the dire plight of the UK economy. When you also consider that the revised figure for the third quarter of 2009 in the UK was a reduction of 0.2% in the economy this does not reflect well against a 0.6% rise in the US. So why is the UK struggling so badly?

In order to appreciate why the UK economy is struggling we need to take a step back and understand why the boom times of years gone by seemed to last forever. In simple terms, the UK economy has depended to a massive extent upon financial services, property speculation and consumer spending. It will come as no surprise to learn that these three particular elements of the UK economy have been hit hardest during the credit crunch resulting in a massive pullback of economic activity and a reduction in the size of the UK economy.

Even though many people believe that the financial services industry, property speculation and consumer spending will come together in 2010 and propel the UK out of economic trouble, longer term there is a need to broaden the dependence on certain sectors in the UK. However, this will be easier said than done when you bear in mind the UK manufacturing industry has been decimated over the last 20 years.

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