Page 2: The Business Cycle
The UK economy has experienced an unusually long period of growth over the past few years, following a period of serious decline in the early 1990s. Businesses have generally enjoyed a robust period of growth on the back of strong growth in sales. However many economists and financial analysts are now predicting that we are about to experience a downturn with the worst predicting a global recession. Where a recession exists incomes and outputs can fall.
The result of a recession is that businesses have lower outputs and in order to maintain profitability companies look to reduce costs by making people redundant. Suppliers to businesses lose orders and may also have to make employees redundant. Employees out of work have less money to spend and this vicious cycle means the economy is in a state of decline.