The effect of Recent Recession on the capital structures of the UK companies

By



ACKNOWLEDGEMENT

I am very grateful to God who has given me the grace to start this course and end it successfully. I would like to thank my family, who worked really hard and stood by me all the way. God bless my family who gave me full support and encouraged me. I would like to thank my supervisor, for her patience and support. Finally to my friends and all who have made the completion of this project a success, thank you and God bless you.

DECLARATION

I declare that the work in this dissertation was carried out by me. The project is my own original work and has not been submitted elsewhere in fulfilment of the requirements of this or any other award.

SIGNED: ............................................................. DATE: ..........................

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

CHAPTER 2: LITERATURE REVIEW1

2.1 Background of the Financial Crisis1

2.2 Profile of an Economic Downturn3

2.3 Economic Recessions of the 20th and 21st Centuries5

2.4 The position of the debt policy in Europe6

2.5 Different aspects of Economic Recession8

2.6 Short-term strategy to tackle recession in UK10

2.7 Long-term strategy for UK recession12

2.8 The value of Capital Assets in the UK's economy13

CHAPTER 3: METHODOLOGY14

3.1 Overview of Research Methodology14

3.2 Qualitative and Quantitative Analysis15

3.3 Theoretical model16

3.4 Sample Size for the study16

3.5 Research Instrument17

3.6 Limitations of the Study17

3.7 Validity and Reliability17

3.8 Ethical Concerns for the Research19

REFERENCES20

CHAPTER 2: LITERATURE REVIEW

2.1 Background of the Financial Crisis

Since 2001, economic growth in the United States had been fueled by rapid increases in asset pricing- primarily through the housing market- and through elevated consumer debt. Consumers are the driving force of the economy. The less money they have to spend, the less economic growth is realized. To stimulate economic growth, financial lenders designed aggressive and creative lending practices that flourished such that by the end of 2006, the United States consumer debt reached nearly $11 trillion. Under this mounting debt, supply out-numbered demand and beginning in December 2007, the economy started to destabilize. Economic instability continued into 2008, when financial lending institutions accumulated significant losses and an increase in repossessed real estate properties. In September, 2008 the fall of Lehman Brothers, a major financial institution, spawned panic on the inter-bank loan market. Organizations such as Bear Stearns, KB Toys, Aloha Airlines, Steve & Barry and others from the retail, transportation and various industries followed suit in permanently closing the doors to their organizations. As stock values and housing prices declined, many large and well established banks in the United States experienced devastating losses, some so significant that bankruptcy was imminent. To avoid bankruptcy, some corporations sought public financial assistance (Beck, 2000, 605).

The consumer market was not the only arena impacted by the economic volatility of the Great Recession. The shift in the economy reflected in corporate enterprises, causing labor markets to deteriorate. This deterioration was documented by the evolution of key labor market indicators unemployment, employment and labor force participation rates. Since the economic downturn began, the unemployment rate climbed ...