Why is the current recession unlike so many others?
As the UK and the worldwide recession continues unabated many people are starting to ask how this particular recession is different from the norm and what exactly is going on. In essence the ongoing worldwide recession is due in the main to a significant reduction in business equity and a sell-off in markets such as the property sector. This has pushed the general wealth of consumers around the world to recent record laws and seen house prices fall before our very eyes.
Recessions of the past have tended to centre on one specific area of an economy, although they do impact upon the whole economy, and historically banks have generally been forthcoming with additional finance. In a traditional recession the continuation of banking finance would in due course see markets pick up and see investor and consumer confidence seep back into the market. However, the difference between this recession and the last one is simply liquidity and confidence.
Reduced liquidity and reduced confidence are significant elements which can impact upon any economy and any investment market on the downside. Until we see a significant improvement in these two areas in particular it seems highly likely that the UK and world economies will continue to struggle.
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