Is The Economy Of UK Faltering Again?
Recently there has been a rise in the debt amount owned by the corporate companies. There has been an increasing debt of nearly 3.1Tn pounds that has to be settled. Many of the economists and financial advisors fear this arising problem, which might, in turn, lead to a global economic crisis. This global economic crisis might lead to a recession and financial crash that happened in 2008. Also, compared to the previous year, this year has recorded a greater amount of Debt increase, which is nearly a double of last year’s amount. This continuous increase in debt was resembling the economic crash of 2008, which resulted in a lot of people losing their jobs and money.
It’s not just the loans taken by the company but normal people also have taken an increased amount of loans from the banks and direct lenders with loans like guaranteed loans for unemployed. The number of people getting unemployed loans has also increased considerably. The household debts have increased by 7% gradually from 2012. This corporate debt along with the household debt if continued will definitely cause a recession like in 2008. People have been continuously using various forms of borrowing techniques like loans, credit cards, payday loans and other forms of overdraft. Also, people are faltering in paying their monthly payments and bills resulting in arrears. Ever since 2012 most of the household has stopped paying their monthly bills resulting in a continuous increase in the debt and it has been predicted that the debt will rise to 47% of the income by the year of 2021.
Problems of another recession
The 2008 economic crash is one of the greatest disasters happened in the country and all over the world after the Great Depression that happened in 1929. One of the main reasons for the occurrence of this economic crash was that the banks allowed the people to take as many loans as possible especially the home loans whose value was greater than the worth of the homes. Along with this, several private companies owned billions and trillions of an amount to the bank, which eventually lead to the economic crash causing the financial crisis. As a result of this crisis, most of the people including normal working people lost their jobs since most of the companies tried to cut down their budget to face the financial breakdown affecting the workers in the process. Most of the software companies dismissed its employees as a result of budget cuts.
Many companies around the World globally got affected by this. The rise in the price of the products and loss of jobs made the life of middle-class people very difficult to maintain. The 2008 crisis led to a severe economic crash.
How to prevent the next crisis
The banking system should be revised continuously to prevent the crisis from occurring again. The bank should place stricter rules and make sure to collect the loans again before facing another crisis. Banks should start to mortgage their properties and perform other proceedings to make them return the loan quicker. Providing a continuous loan to corporate companies should be avoided.
People should also be made conscious about the economic conditions available in the country and strict action should be taken against people for failing to pay the bills and the other forms of debts. The government should take proper action against the bank and the corporate companies to prevent the occurrence of recession again. Strict rules and policies are the only way available to prevent this crisis from occurring again.