The UK recession

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  • Created on: 20-03-13 23:09
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The Recent Recession in the UK
A recession is a downturn in sales and production that occurs across most parts of the
economy, perhaps leading to six months of continuous economic decline. The UK officially
entered a recession in January 2009, as gross domestic fell by 1.5% in the last three months
of 2008 after a 0.6% drop in the
previous quarter; this results in a
loss of jobs, a decline in real
income, a slow down in industrial
production and a slump in
consumer spending. You may
think that a recession is bad
news for businesses, and for
most it is! However a recession
creates both opportunities and
threats for businesses and
A recession brings a lot of threats to your business. The majority of businesses will notice
that there are fewer new customers walking through the doors of your business. You are
also likely to lose existing customers as they are trying to control their rising expenses. The
resulting loss of income and decline in profits could be very damaging to your business.
Another big problem arises if a business has a retail location that has a mortgage loan on it.
This is because lenders have been steadily hiking their interest rates in a bid to cover their
losses due to other borrowers not being able to pay their monthly instalments. If you have
taken out a loan to run your small business, then you could suffer if you do not have
adequate savings to fall back on.
On the other hand, recessions do make several opportunities for businesses. It is in
recessions when companies in every industry have to compete for business more than ever
which often results in a reduction on prices ­ which your business can really benefit from as
well as consumers. This is particularly prominent in the marketing industry where you can
take advantage of reduced advertising rates. Although your business maybe be doing fine in
a recession, you will have certainly seen many of your competitors suffer; so potentially a
recession could reduce competition for your business and if you ensure a good marketing
strategy, your business is likely to grow during a recession. A recession also provides
(sometimes forces) businesses to add new solutions or products to your range, or adapt
existing ones, to meet new and changing customer needs; this could potentially result in
more innovation which you and the customer could really benefit from.
One example of a business that really thrives during
a recession is pound shops. In 1999, there were 380
pound shops in the UK. By the end of 2009, that
number had grown to 742. Poundland has
Dan Grist

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Woolworths. "Since the recession hit, higher numbers of shop units have
become vacant and it has become easier for discount and value offer shops to pick up
better quality space at a good price."
There are several different strategies that a business can adopt in a recession in order to
help them through. If you are a producer of luxury goods then revenue is bound to fall,
therefore businesses must minimise losses by introducing several cost-saving measures.…read more

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Taking on
additional loan capital is very hard during a recession as the availability of credit tends to dry
up as banks reassess their attitude towards risk. It may sound quite drastic but selling off
fixed assets such as machinery and property in order to bring more cash into the firm is a
strategy that a lot of businesses take in a recession.
The economy is too erratic to be able to predict and therefore you can not predict a down
turn.…read more


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