Preview

The Collapse of the High Street and Its Wider Economic and Business Implications.

Better Essays
Open Document
Open Document
1821 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
The Collapse of the High Street and Its Wider Economic and Business Implications.
The Collapse of the high street and its wider economic and business implications.
Image:Colchester high street showing tough times with stores closing at a rapid rate.

The warning signs of a crumbling economy in Britain can be seen as far back as 2007, with New Century Financial specialising in sub prime mortgages filed for Chapter 11 bankruptcy protection. With the banks being sold many of NCF’s debts, so began the collapse of the sub prime mortgage market. The impact of this collapse was soon felt by banks on a global scale. Later in July Investment bank: Bear Stearns tells its investors they will not receive any money due to rival banks not providing a bailout.

In Britain Northern Rock were amongst the first to feel the media coverage of what was revealed as just the beginning of an economic decline, Little did the public know just how deep we were about to go into decline.
Fast forward one year later and Britain is on the brink of a recession House prices have fallen by 10.5% and Chancellor Alistair Darling warns that Britain is facing its worst crisis in 60 years.

In the US the government bailed out Fannie Mae and Freddie Mac accounting for almost half of the outstanding mortgages in the USA, it was seen as one of the biggest bailouts in history.
This side of the pond in the UK, Lloyds TSB announced that it will take over HBOS one of the UKs biggest mortgage lenders.

Jump to today and Britain 's economy has avoided a triple dip recession. "The Office for National statistics said its preliminary estimates for gross domestic product (GDP), showed the economy grew by 0.3% in the first three months of the year." (1) However our minds are still fresh from the UKs embarrassing blow earlier in the year, by losing its AAA credit rating, from one of the worlds leading credit rating agencies Moody 's. Now at AA1 this is the first time in Britain 's economic history that it has had a less than perfect rating. This came as an even bigger blow for



References: (1) BBC News. (2013). UK economy avoids triple-dip recession. Available: http://www.bbc.co.uk/news/business-22290407. Last accessed 25 April 2013. (2) Duncan,H. (2013). Talk of high street death is premature. Available: http://www.thisismoney.co.uk/money/markets/article-2264679/HUGO-DUNCAN-Premature-talk-high-street-death.html. Last accessed 15th April 2013 (3) Coby,A.S (4) Chahal, M. (2013). Open all hours: the future of the high street.Available: http://www.marketingweek.co.uk/trends/open-all-hours-the-future-of-the-high-street/4005606.article. Last accessed 24th April 2013. (5)Chahal, M. (2013). Open all hours: the future of the high street.Available: http://www.marketingweek.co.uk/trends/open-all-hours-the-future-of-the-high-street/4005606.article. Last accessed 24th April 2013.

You May Also Find These Documents Helpful

  • Good Essays

    This started with the company Bear Stearns declaring itself strapped of cash in March of 2008. Then Fannie Mae and Freddie Mac, two of the biggest housing loan agencies, were acquired by the federal government which rang bells throughout the economy that the ground was paving way right beneath their feet. What followed was a domino effect, with a succession of top investment banks and other financing houses either adopting bankruptcy or being bailed out by the government. The third approach taken by these companies to keep from collapsing within themselves was to request the Congress for a $700 billion bailout. Despite this and other initiatives adopted by the Bush administration, the…

    • 549 Words
    • 3 Pages
    Good Essays
  • Good Essays

    In the 1950s and 1960s shops selling high-order goods, like furniture and jewellery, were in the town and city centres, which attracted customers from a wide catchment area. Shops selling low-order goods, like food, were located in the local neighbourhoods. However, this traditional shopping pattern began to change in the 1970s, when shops like supermarkets and DIY stores began to move to the outskirts of towns by decentralisation. Although it is obvious that the decentralisation of retailing and other services has had a major impact on urban areas, the impacts have been negative, positive or neutral.…

    • 1482 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Review of Major recessions: Britain and the world, 1920-1995 by J.C.R. Dow Business History. 41, 4 Oxford: Oxford University Press, 1999…

    • 2453 Words
    • 10 Pages
    Powerful Essays
  • Powerful Essays

    The Gramm-Leach-Bliley Act

    • 1796 Words
    • 8 Pages

    The financial crisis of 2008 is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. First signs of the crisis started to show in 2007 when the price of houses started to fall rapidly in the United States and then around the world. This financial crisis resulted in the failure of many large US financial institutions, banks to be bailout by the United States government, and the stock markets around the world were affected. One of the major issues leading to the financial crisis was the rising default on subprime lending. Large financial institutions were in completion with each other for revenue and market share,…

    • 1796 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    In the year 2008 the UK saw the start to a growing recession, in recent years of 2010, 2011 and even into 2012 Wales recession is still in a bad state, but being controlled a bit more. Towards the start of 2012, the government reduced interest rates by 0.50% to encourage customers to spend more., this helped as In 2011 the total spending on Debit/Credit cards was £38.2 billion, however in 2012 the total spend had been £42.2 billion.…

    • 2486 Words
    • 10 Pages
    Better Essays
  • Good Essays

    American Dream Barriers

    • 659 Words
    • 3 Pages

    culture, one with enduring significance. During the years preceding the credit market collapse in 2008, the subprime mortgage industry thrived. Individuals with bad credit were given access to loans that weren’t supposed to be able to go to them. But as long as home prices were on the rise, these poor lending practices were simply ignored. Lenders could afford to write poorly used loans as long as the homeowner's equity outpaced their desire for new debt. If borrowers were to fail to payback their loans, lenders could always foreclose on the home, since it was an asset with ever-increasing value. The credit market's problems began when housing prices started to fall in 2007. Homeowners frequently found themselves with underwater loans, owed lenders more than the home was worth and when faced with these facts, homeowners began to fear the threat of foreclosure. Even more disturbing was the fact that some families abandoned their homes; choosing to start their lives anew elsewhere rather than worry about paying off their debts. Many Americans had wages lowered, resulting in strike, others were laid off or fired. This caused a major debt in the economy and stunted the growth of…

    • 659 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    2008 Recession

    • 1511 Words
    • 7 Pages

    The downfall that many if not all bank and lending institutions faced, catapulted the economy dramatically. The previous lending habits of these institutions show a direct correlation with the credit bubble that occurred from 2001 until 2007. The results of these lending habits were experienced not only in the United States, but worldwide issues began to surface. Though, many believe that the final factor may have been the “bursting” of the U.S housing bubble. The housing “burst” causing many individuals to default on their mortgages. The National Bureau of Economic Research stated that, “while large on an absolute scale, are modest relative to the $8 trillion lost in U.S. stock market wealth between October 2007 and October 2008” ("The National Bureau of Economic Research"). Additionally, In Deciphering the Liquidity and Credit Crunch 2007-2008 (NBER Working Paper No.14612), Markus Brunnermeier describes how those lesser and larger losses were linked and shows how economic mechanisms amplified losses in the mortgage market into broad dislocation and turmoil in the financial market” (Brunnermeier,2009,pp 77-100). Yes, the depression did in fact begin in 2008, however, the actions that occurred in the aforementioned time period were notable confounding influences on the depression of 2008. Other causation factors include the collapse of Lehman Brothers. Yes, this financial institution is based in the United Stated, yet their demise, as The Economist indicated that, “ In September 2008 almost brought down the world’s financial system” ("The Economist", 2013). The saving grace for Lehman Brothers, was that they were to “large” to fail. The monetary and fiscal abilities of the United States tax payers prevented the less than favorable quote “buddy-can-you-spare-a-dime” depression” ("The Economist", 2013). The United States practices further…

    • 1511 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    The financial crisis of 2007–2009 began in July 2007 when a loss of confidence by investors in the value of securitized mortgages in the United States resulted in a liquidity crisis that prompted a substantial injection of capital into financial markets by the United States Federal Reserve, Bank of England and the European Central Bank (see desktop Financial recession 2007 -..) Although America 's housing collapse (which peaked in approximately 2005 – 2006) is often cited as having caused the crisis, the financial system was vulnerable because of intricate and highly-leveraged financial contracts and operations, a U.S. monetary policy making the cost of credit negligible therefore encouraging such high levels of leverage, and generally a "hypertrophy of the financial sector" (financialization) ( see desktop doc in above citation).…

    • 1730 Words
    • 7 Pages
    Powerful Essays
  • Best Essays

    “Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.…

    • 2234 Words
    • 9 Pages
    Best Essays
  • Best Essays

    The United States of America is in the middle of the worst financial crisis in more than 75 years. To date, federal regulators and authorities have taken unprecedented steps to stop the complicated situation of the financial services sector by committing trillions of dollars of taxpayer funds to rescue financial institutions and restore order to credit markets. Although the current crisis has spread across a broad range of financial instruments, it was initially triggered by defaults on U.S. subprime mortgage loans, many of which had been packaged and sold as securities to buyers in the United States and around the world. With financial institutions from many countries participating in these activities, the resulting turmoil has affected financial markets globally and has spurred coordinated action by world leaders in an attempt to protect savings and restore the health of the markets.…

    • 2109 Words
    • 9 Pages
    Best Essays
  • Good Essays

    BBC (2009) ‘ How the recession has changed spending’ . Retrieved on 19th February 2010, online at http://news.bbc.co.uk/1/hi/magazine/8318595.stm.…

    • 5653 Words
    • 23 Pages
    Good Essays
  • Better Essays

    recession is a period of negative economic growth for 2 consecutive economic quarters. In the post war period UK economic growth has been characterized by the boom and bust economic cycles. A period of growth is followed by high inflationary growth and then a downturn in the economy. However since 1992 the UK has experienced a long period of economic growth, the longest period of uninterrupted growth this century. It appears the UK has temporarily avoided the threat of recession, but although forecasts remain positive there are many factors that could push the UK into recession.…

    • 611 Words
    • 3 Pages
    Better Essays
  • Powerful Essays

    A2 Level History Complete Guide

    • 48155 Words
    • 193 Pages

    Huge difficulties – damaged infrastructure, saddled with massive debts, pre-war markets lost, old staple industries in decline, Britain reliant on US to begin economic recovery, key industries (coal, steel, rail) had been nationalised by Attlee (hopes of faster modernisation), many consumer goods scarce and expensive, rationing only just coming to an end. Britain sliding down the league tables of the world economy 1951-2007 –…

    • 48155 Words
    • 193 Pages
    Powerful Essays
  • Powerful Essays

    The economy of the United Kingdom had been hit by rising oil prices and the credit crisis. Sir Win Bischoff, chairman of Citigroup, said he believed that house prices in Britain would keep falling for another…

    • 2291 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    In a documentary “Overdose: The next financial crisis” (2012), trend analyst G. Celente stated that the recession in 2007/2008 was far from being resolved, and created even more dangerous ‘economic bubbles’ that are estimated to ‘explode’ in late 2017 or early 2018 with more damage than ever before. The main reasons are low interest rates in UK reaching merely 0.25% by Taborda (2017), which leads to huge state spending, national debt and growing interest payments. The predictions of the next recession became even stronger after stock markets and consumers’ confidence fell incredibly low after the UK vote to leave the EU, according to the “Independent’s” Economics editor, Chu (2016).…

    • 235 Words
    • 1 Page
    Good Essays