Giving economic circumstances over the last five years of how Tesco, Essay - 1

Giving economic circumstances over the last five years of how Tesco, Sainsbury and Morrisons have coped - Essay Example Falling house prices which were caused by shortage of mortgages made the economy to worsen and investor fell short of repaying their loans. This act made lending institutions to halt their loaning as they feared that their customers were unable to repay. Another cause for recession in United Kingdom was cost push inflation which made civil servants to squeeze their incomes and lower their disposal earnings. Citizen more so civil servants were very careful on every penny they spent for the cost of living had skyrocketed making them to evade any impulse buying. Lack of confidence with financial sector reduced confidence in real economy thus perpetuating low trading and therefore less revenue. Consequently, the retail sector which hugely depends on the buying behaviour of the customers was financially affected. The economic turmoil affected the overall retail sector worldwide to a large extent, top retail giants including Tesco, and Sainsbury also faced decline in their share prices due to a major brunt of the financial crisis (Hotten, 2008). Many retail sectors like the financial and other retail sectors did job cutting in order to combat the financial turmoil. Though the groceries giants like Tesco, Sainsbury and Morrison aimed at in creasing the jobs but due to the closure of some of the grocery depots like Tesco who closed its Daventry’s depot of Fast way distribution has resulted some job loss (The Telegraph, 2008). However, in the last five years except 2008 and 2009 UK witnessed a positive GDP growth rate (BBC News, 2011). At the end of 2009 UK recovered from the global recession which was caused due to the ripple effects of the failure of subprime loans and bankruptcy of the big financial institutions but can be hugely affected due to the predicted recession of 2012 which may happen mainly due to the debt crisis of the European countries (The Economic Times, 2011). The graph below shows how recession took place and the way