Under this background, 6 May 2010, the United Kingdom general election of 2010 got the result, Conservative Party became the first party in parliament and they made a coalition with liberal democrat which led by Nick Clegg. David Cameron, the leader of Conservative Party assumed the prime minister in UK. On 22 June, 2010 Chancellor George Osborne announced the first Budget based on the Government’s values of responsibility, freedom and fairness20.  In this plan, the urgent target is to fix the unbalance UK economy, but most debatable provision is VAT rate will rise from 17.5% to 20% from January 4, 2011, although the intention of Conservative is increase the revenue20. On the contrary, it represent that British people need to pay more tax than before, and the UK commodity will lose competitiveness as well, because the higher price. In other part like council tax and capital gain tax both have different growth rate; however, in the government spending like child benefit and house benefit will decrease in the next 5 years21. As mentioned above, the new allied government eager to pull out the fragile UK economy from serious fiscal deficit mud. I can’t and want not to say who will obtain benefit from this budget, but one thing I can define are British people will spend an arduous 5 year. As Baroness Williams said: We're in 'one hell of a mess’.

 

Summary of the Budget policy decisions

 

A summary of the fiscal impact of Budget policy decisions is set out in the table below

 

 

The current situation of global economy

 

 

The global economy is suffering a recession ordeal that began in the United States in December, 200724. Due to the current world economy system, this recession  spread to much of the industrialized world, and has caused a announced deceleration of economic activity. This global recession has been taking place in an economic environment identified by various imbalances and was sparked by the outbreak of the financial crisis of 2007–2010.

 

Compare the last worldwide recession in 1930s, nowadays, the connection between each country or economy union are more tight, the mutual cooperations are more frequent. so when US occurred sub-prime crisis, it lead to the worldwide economic panic. Certain countries were vastly affected more than others. By measuring security market decline, currency devaluation, and the rise in sovereign bond spreads, Carnegie Endowment for International Peace reports in its International Economics Bulletin that Ukraine, as well as Argentina and Jamaica, are the countries most deeply affected by the crisis.

 

GDP comparison

 

Generally, GDP is widely used to measure the economy development. Compare growth rate in 2007 and in 2009, all the important economy unions slipped down in certain level. Among these, severely affected countries are Russia, United States and United Kingdom. GDP growth rate in Russia from 5.18% in 2007 fell to -7.9% in 2009, US (4.17% in 2007, -2.4% in 2009), UK (5.82% in 2007, -4.8% in 2009), Japan (2.0% in 2007, -5.3% in 2009), Germany (3.72% in 2007, -5% in 2009). By contrast, China (12.37% in 2007, 8.7% in 2009), India ( 5.71% in 2007, 6.5% in 2009), and Brazil ( 4.58% in 2007, -0.2% in 2009) are "among the least affected. "

 

Unemployment rate

 

International Labour Organization (ILO) predicted, as the economy recession, there are over 200 million unemployment in the worldwide bringing by the financial crisis. Unemployment rate in advanced country is more severe than developing country. According to the Central Intelligence Agency, most economy had certain raise. In industrialized economy, europe country went up most severely, in UK, rate increased from 5.3% in 2007 to 7.6% in 2009, Russia (5.9% in 2007, 8.4% in 2009), the EU average unemployment rate raise from 7.1% in 2007 to 9.7% in 2009, and Spain was conflicted hardest, reached 18.7% (37% for youths) in May 2009 — the highest in the eurozone.26 27 In December 2007, the U.S. unemployment rate was 4.9%.28 By October 2009, the unemployment rate had risen to 10.1%.29 A broader measure of unemployment which account marginally attached workers, part job and discouraged workers was 16.3%.30 In July 2009, fewer jobs were lost than expected, dipping the unemployment rate from 9.5% to 9.4%.

nt situation. In US, mostly in "construction, real estate, financial services, and the auto sector, in China, unemployment group is mainly in the manufactory industry and low added value sectors, and most factories located in the south of China.The number of unemployed people worldwide could consecutive increase by more than 50 million in 2010 as the global recession intensifies, the ILO has forecasted.

Financial market

 

As the one of victim in the recession, the global financial market shrinked over trillions dollars in the past three years. According to the announcement, International Monetary Fund estiamted that US and European banks lost more than $1 trillion on toxic assets and from bad loans from January 2007 to September 2009. These losses are expected to top $2.8 trillion from 2007-10. U.S. banks losses were forecast to hit $1 trillion and European bank losses will reach $1.6 trillion.32 Meanwhile, the major equity markets in the world were declined in certain degree. The average Don Jones industrial index decreased from peak(close to 14000 in October 2007) to the bottom(nearly 6600 in March 2009), impaired over halves than before. FTSE 100 index declined from 6730 in Oct 2007 to 3530.7 in 2st March 2009. NIKKEI 225 index fell almost 60% from July 2007(18200) to April 2009(7173). Obviously, this is a contagion in the worldwide, and most of stock market devalued exceeding 50%, compared the period before recession.

Summary

 

This chapter contains the overview of UK and global market in the 2009, first introduce the UK economy which decreased 10.5% in GDP from 2007 to 2009, and unemployment number increased 2.3% from 2007 to 2009, UK fell into the economic quagmire. In the same time, Global economy suffered the dilemma as well. In the next chapter, we will realize the performance of worldwide property industry and UK’s in the recession period