Unemployment in the UK Essay Example | Topics and Well Written Essays - 1500 words - 2

Unemployment in the UK - Essay Example It is worthwhile to mention the fact that employment and business outlook aggravated in 2007 – 2008 after collapse of housing sector or property market and ‘bursting of speculative financial sector’ that resulted in financial difficulties and a credit crunch like situation. Indeed, the bankruptcies of various small and large financial institutions followed by closures of manufacturing and services sector organisations led to rapid surge in unemployment and economic contraction. In simple worlds, the aggregate demand and supply reduced that in turn resulted in a decrease in productive activities and new employment opportunities for general public. The weakness in economy, consumer buying power and real incomes also adversely impacted relatively strong sectors such as heavy machinery, engineering, arms, information technology, airline industry, electronics and others etc. because of fall in demand from all consumers. Hence, these strong sectors were unable to sustai n their business volume and cut down their employees thereby contributing in unemployment across UK. (Gregg and Wadsworth, 2010) Economists have provided an explanation that the weaknesses in financial system were actually the major reason behind UK economic collapse. Indeed, the dependence of consumers on plastic money (such as credit cards, debit, visa etc.) for spending and purchasing goods and services and decrease in circulation of monetary units is itself noxious for sustainable development and smooth functioning of the economy. Secondly, the role of financial institutions in subsequent growth of non-productive business sectors such as mutual funds, leasing, mortgage, securities and bonds obviously could benefit in short-term growth and expansion of money and financial markets. Indeed, contribution of manufacturing sector in Gross Domestic Product of United Kingdom is barely above 20% whereas services