Research Proposal Britain For Economic Downturn: Factors, Strategies And Impacts

Problem Statement

Discuss about the Research Proposal Britain for Economic Downturn.

The economy of the United Kingdom is the fifth-largest economy in the globe which is considered by the supposed gross domestic product. It is also ninth-largest in the globe in terms of purchasing power parity, which contains 4% of world’s GDP. The UK has been the fastest-growing country in the G7 by four successive years; it has 2.2% development in the second quarter of 2016.  But, when downturn occurred, they had faced several complexities. There are different factors that have to be measured as influencing factors of the Britain economic growth (Burrell, 2016). The UK economy entered in a recession in 2008 and also it existed in 2009 by increasing the unemployment rate i.e. 5.2% in 2008 and 7.6% in 2009. But, in 2010, economy improved by 1.2% because of new government policies. Government of the Britain made effective policies such as cut down in the interest rates in order to overcome the national debts challenges and to increase the employment rate. But still, the unemployment rate was elevated and the economy has faced to bring back the development. In 2013, market growth rate peaked due to reduction in the unemployment rate. Further, economic growth has increased by bounce back in the housing market and tough development in both manufacturing and services industries (McCloskey, 2015). But, it has been disputed that the economic improvement was not accomplishing the bulk of the people in the Britain, with wage growth rate being low. 

The purpose of this research is to undertake a complete research in identifying economic factors that have impact on the Britain economy so that, this report can help in identifying actions for the UK economy against downturn situation and be better prepared whenever situation of next recession occurs. The research proposal throws light on where the decision makers of the Britain failed and which strategies implemented by Britain government went unsuccessful and what strategies will overcome the economy downturn situation.

The downturn is the occurrence of declining demand for resources, goods and services in its starting, and ending depend on the outfitted actions which are used by different decision makers and the centralized government. It leads to a fall in market share, boost in unemployment rate, sluggish salary, drop in trade sales, and decreases in the accommodation market. It is stated that if the recession will longer period, it can be categorized as an economic depression. In the Britain, there were worldwide recessions during the years 2008 – 2010 that was Great Recession period (Cain and Hopkins, 2016). It is stated that there were different quarters sluggish but still optimistic growth.

Research Objectives

A declining consumer demand is a cause behind slowing growth. As, sales has declined, the company had stopped their expansion plans and also stopped hiring new workers. The downturn is ongoing in the first quarter of 2008 while the economy is slightly decline, only 0.7%, and rebound in the subsequent quarter to .6%. Further, the economy mislaid 16,000 employments in 2008. In those years, Britain economy was destructive because, it created widespread unemployment that affected most of the people (Taylor, et al., 2015). Further, as the unemployment rate mounted, consumers reduced their purchases even more.    

In this report, researcher analyzes different economic factors and also evaluates the reason that impact on the Britain downturn economy. Further, this research is based on the different strategies and new concepts which are adopted by Britain government in order to overcome the Recession. This research is effective for decision makers to take preventive measures when downturn takes place in the future.

The aim of this research is to analyze the economic factors that impact on the Britain economic downturn. For accomplishing main aim of research, following research objectives will be achieved through research:

1. To understand the meaning and concepts of downturn economy.
2. To determine the economic factors that impact on the Britain and lead to downturn economy.
3. To discuss the consequences of Recession in the Britain economy.
4. To recommend the strategy to overcome the recession condition in Britain.

Following are different research questions that would be answered by accomplishing this research:

• How did recession have an effect on the Britain economy?
• What were the consequences faced by Britain government as a result of downturn?
• How did the Britain government take action to break the downturn conditions?
• What are the factors that force the Britain economy downturn under Recession conditions?

The downturn has been a period of the rigorous that affects the popular countries like USA, UK, Canada, Australia, Japan, China, India, and New Zealand. Further, the Britain economy had suffered losses and high unemployment rates during the period of 2008-2010. This research will help the government to understand the different factors that can affect the economy and that are a reason to happen the recession in the country (Goldstein, et al., 2013). From this report, the government will able to address the mechanism to deal with the recession condition.

This research proposal also helps to readers to broaden the understanding of the recession economy condition. This proposal will be also effective for existing organization and new ventures/startups as they can develop awareness about the cause, impacts, and consequences of the economy downturn. Consequently, it will enable them to be better prepared and sensible in case Recession occurs in the future (Park, et al., 2014). This research will help policymakers and researchers to identify right focus areas during and after the economy downturn.

The outcomes of this research will offer the critical structure to examine the factors affecting Britain economy due to Recession. Hence, this report will help to develop understanding and analyze the strategies that are used by decision makers in order to deal with the economic downturns. This report will provide the complete picture about Recession that helps to address the factors that drive Britain economy under Recession conditions. The economy downturn is based on the different factors such as unemployment rate, and stock market circumstances. These factors will have an impact on the ultimate result of this research study. Further, all the research objectives/questions will be recognized in the plan and will be responded based on the information gathering, findings, and analysis (Mulia, et al., 2014). These research outcomes will be scrutinized as significant scholastic work due to identifying the problem for this research plan. Additionally, this research will aid the government to focus on these economic factors to deal with the recession.

Research Questions

Meaning and concepts of downturn economy

According to the Ahmed et al (2014), an economic downturn is defined as the economic growth rate declining and probably entering into downturn. A downturn is an element of the economic phase that is also known as the trade phase or business phase. Further, the downturn is the pessimistic economic growth for two successive quarters. For instance, during 2010 – 2012, the UK economy was declined with the economic development of approximately 0%.

The key characteristics of an economic downturn comprise:

• Pessimistic or very low economic development
• Increasing unemployment
• Diminishing asset worth such as shares and house worth
• Low down self-assurance and declining asset
• Negative output gap
• Mounting government borrowing

In support to this, Modica and Reggiani (2015) states that a downturn happens while there is a decrease in economic development for two successive quarters. Further, according to Keynesian analysis, if there is a go down in aggregate demand then there will be go down in Real GDP that is based on the slope of the aggregate slope curve. Besides this, if the economy is nearest to lower aggregate demand then it would be caused a small go down in real gross domestic products. It is said that aggregate demand is composed with C+I+G+X-M, so the decline in these components could reason to happen the downturn.

In the view of De Grauwe (2016), there are different factors that affect the Britain economy such as demand, supply, interest rate, unemployment and wage rate. Another factor that determines the economic development rate is the intensity of buyer and company’s confidence. For example, if confidence is peak then elevated interest rates may not decrease the demand. But, if self-assurance is low down and people scares that they can unemployed, and then they will a smaller amount spend, causing AD to go down. It indicates that expectations are very important for people to deal themselves into a recession.

According to the Gillespie (2014), the high-interest rate is another factor that causes of recession because it sets the liquidity and also decreases the value of money available to invest.  Further, it depicts that inflation is another factor. It indicates the high price of goods and services over the period. As inflation rises, the demand for the goods and services has declined.  Additionally, reduce real wage rate is another factor that impact on the Britain economy downturn. A declines real wage rate declines the purchasing power due to not having enough amounts to purchase.  

In favor to this, Treasury (2016) states that there are different causes of occurring recession in 2008 and 2009 named credit crisis, declining house worth, Cost push inflation and fall down in confidence. Credit crisis explained the lack of investment. Declining house worth is related to a deficiency of credit and credit crisis. Cost push inflation is constricting income and also dropping disposable income. The fall down in the confidence of finance zone defines the worse confidence between the real economies.

Justification of the Project

According to the McKay et al (2013), there are different consequences of the recession in Britain economy. It is stated that recession does not affect everyone such as a fall in GDP will cause an increase in unemployment. Because, some companies will go bankrupt that means most of the workers lose their jobs. In support to this, Paroutis et al (2014) opines that in the recession period, unemployment is increased over 26 million. Further, firms also try to cut down their cost by keeping the low wages. Along with this, some workers may keep their job, but focus on their hours cut excluding to do full-time work as they become temporary workers. It indicates that rise in unemployment may be muted but, at the same time, the income of the workers has also fallen. On the other side, Gardiner et al (2013) exemplify that recession is affected the government as the fall in taxation revenue. Because, firms make the less profit, therefore government receives lower corporation taxes.  Another reason of fall in taxation is to decline the worker’s income, lower house price, housing transaction, and lower stamp duty. Furthermore, lower expenditure lead to reduce VAT payments.

In support to this, Gourevitch et al (2016) state that recession has also created negative consequences on  the government spending such as it raises on the welfare payment include unemployment benefits and income support.  Another consequence that occurs due to recession is a budget deficit. It is stated that falling tax revenue and rising welfare payment tend to the recession cause which has an effect on the budget deficit and total government debts.    

According to the Buck (2016), there are different policies that can be effective to avoid the recession includes cutting interest rate, stop house seizure, Expansionary economic policy, economy reduction, Quantitative reduction, and high Inflation object. The cutting interest rate should assist to increase the aggregate demand. Because, the worse interest rate is effective to reduce the mortgage interest payment and also persuade the companies and consumers to pay out excluding the saving money. 

On the other side, Gardiner et al (2013) depict that home repossession can cause the bank deceased and drop in consumer spending. The government may undertake to control credit rates to prevent the house seizure. Further, the Federal Reserve should try to cut the taxes to increase the consumer disposable income. But, it will be caused to high government bowings. Besides to this, the government should also spend more on the capital asset plans because it directly adds capital into the economy. It is stated that this policy is more appropriate than the tax cut. 

Expected Research Outcome

Along with this, Paroutis et al (2014) discuss that reduction in the exchange rate can enhance the aggregate demand (AD) of the customers in the Britain economy. A declining worth of the dollar makes export cheaper and import more costly consequently, household demand will be decreased.   

Following are the hypothesis for this research:

Null Hypothesis (H0): Economic factors have an impact on Britain economy downturn.

Alternative Hypothesis (H1): Economic factors do not have an impact on Britain economy downturn.

The below methodologies will be followed to efficiently examine the aims of this research plan. It is discussed as below:

Literature Review

In this part, a researcher will deeply study and scrutiny the appropriate literature and assesses the data obtained from different sources such as Google scholar, Emerald and academic journal, articles from various authors.

Data analysis method includes the qualitative and quantitative methods. Qualitative analysis is used by the researcher to conduct online discussion and assessment with financial experts and managers while Quantitative analysis will assess by the researcher to show the information in statistics, pie diagrams, excel sheets, arithmetical and numerical data using the online sites and academic editorial (Mackey and Gass, 2015).

For this dissertation, mix research data analyzing method will be used by the researcher.  The quantitative data analyzing method will be exercised by the researcher to hypothesis testing such as to assess whether the information accepts or rejects the hypothesis.  Further, qualitative data analyzing method will be used to assess the concepts of literature as it helps to establish the findings. A mixture of methodologies is used to obtain the precise explanation for the research dilemma which is recognized in the problem statement. Furthermore, secondary information will be used by the researcher to assess the information as compared to primary data (Flick, 2015). Because, the research problem is based on the analytical so, data is obtained from the literature review and case study.

Following are the organization of this research:

The First section will explain the research plan.

The second section will discuss the concept of Britain economic downturn in-depth.

The third section will involve the research methodology like literature review, data collection methods, and data analysis methods.

The fourth section will show the Findings and Analysis of the projected research.

Fifth section will evaluate the imperative findings and explain their propositions in Britain economic downturn.

The following table depicts the time structure for the entire research to be accomplished.

Section 2

The budget for the projected research study is approximately GBP 1500 to accomplish the objective of this research within the time period (29th March 2017) that is given in the Gantt chart.

This budget is based on the following components of the research:

• For accomplishing the Literature Review, different course book, academic journals, editorial and online resources are required that cannot be assessed without charge. Therefore, there will be charge approximately GBP 500 to buy these resources.
• Data collection is the effective source to gather the information about the research problem. Therefore, there will be around GBP 500 to buy case study from different authors and organizations. Because, it is a better approach for collecting information from different organizations about the impact of the recession on them and their survival strategies.
• To find graphs, tables, administration data for information scrutiny, the cost of financial plan to be paid around GBP 500.

In synopsis,

References

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Burrell, K. (2016). Polish Migration to the UK in the'new'European Union: After 2004. UK: Routledge.

Cain, P. J., & Hopkins, A. G. (2016). British Imperialism: 1688-2015. UK: Routledge.

De Grauwe, P. (2016). Economics of monetary union. UK: Oxford university press.

Flick, U. (2015). Introducing research methodology: A beginner's guide to doing a research project. USA: Sage.

Gardiner, B., Martin, R., Sunley, P., & Tyler, P. (2013). Spatially unbalanced growth in the British economy. Journal of Economic Geography, 13(6), 889-928.

Gillespie, A. (2014). Foundations of economics. USA: Oxford University Press.

Goldstein, J., Kreyenfeld, M., Jasilioniene, A., & Örsal, D. D. K. (2013). Fertility reactions to the" Great Recession" in Europe: Recent evidence from order-specific data. Demographic Research, 29, 85-104.

Gourevitch, P., Markovits, A., Ross, G., Bornstein, S., & Allen, C. (2016).Unions and Economic Crisis: Britain, West Germany, and Sweden. UK: Routledge.

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McCloskey, D. N. (2015). Essays on a mature economy: Britain after 1840. USA: Princeton University Press.

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