I.

Abstract:

The study investigated about the crisis which has been happening in over the world, particularly in Europe, the United Kingdom and II. Introduction: The global financial crisis, which began from the problems in the United States subprime mortgage, has been happening since the final quarter of 2008. As the result, it affects to the microeconomic policy in Europe and in the United Kingdom as well. However, as Evans and Maxwell (2008) propose that it may be the time for developing countries to start nailing shutters on the windows. Besides that, the crisis has intensified, the international central banks need to slacken off monetary policy and support demand. Therefore, the United Kingdom has been using conventional and unconventional policy measures.

Definition: Robison defined the crisis in 1968 as: Crisis is a lay term in search of a scholarly meaning. To put it more simply, Parad comments: Crisis intervention is in a fair way of becoming a fad or a bandwagon movement in which some concepts are oversimplified and others arouse unrealistic expectations. Moreover, Friedman and Schwartz (1963) have linked financial crises with banking panics. However, Kindleberger (1978) and Minsky (1972) had another definition about financial crisis. In their opinion, financial crises either involve sharp declines in asset prices, failures of both large financial and nonfinancial firms, deflations or disinflations, disruptions in foreign exchange markets, or some combination of all of these. The effectiveness of the financial crisis to the macro-economic: The economic has declined during the crisis. As the result, it affects to sufficient income, stock market, national debts. According to the plan for growth from HM Treasury, the United Kingdom cut down in international competitiveness rankings, with
tax rates, regulation, contact to finance and planning all cited as problematic for doing business in the United Kingdom. Particularly, the others effectiveness which is determined

as the key of bank crisis are credit risk, lack of adequate capital, sharp increases in

short-term, interest rates, currency mismatches, presence of a deposit insurance scheme, financial liberalization, lending booms, and external economic conditions. In addition, the recession caused some effectiveness to the United Kingdom economy which are high interest rates and an overvalued pound. As a result, goods are very expensive to export and cheap in import. On the other hand, the crisis makes some causes to employment. Because the recession will directly affect to business activities, unemployment has increased in over the period of the crisis. For example, the trend of the UK unemployment has grown up. Especially from 2008 to 2009, the trend largely went up. The recovery to solve the crisis: In the United Kingdom, the Bank of England has been using both conventional and unconventional measures which is called quantitative easing (QE) to loosen monetary policy. The Bank began to purchase 200 billion of assets over the period March 2009 to January 2010. Furthermore, the Government has formulated policies in the plan for growth to recovery the economic in the United Kingdom. According to that plan from HM Treasury, the Government wants to encourage investment and exports as a route to a more balanced economy. In addition, the way to solve tackling the issues of unemployment increase is creating a more educated workforce.

The result of the recovery: Accordingly to the latest quarterly survey by the British Chamber of Commerce (BBC), the recession has been better than the beginning in 2008. However, it is not unavoidable that the economic in the United Kingdom has been significant weaken. Furthermore, as the Office for National Statistics (ONS) said, the increase in unemployment in the three months to November has been the highest since January 1996. It makes the market becomes struggling and unemployed young people feel less confident. However, there is a good news for the UK economic, inflation went down from 4.8% in November to 4.2% in December. Marchel Alexandrovich, analyst at Jefferies International, said: The inflation backdrop will improve going forward which will make it easier for the Bank of England to do more quantitative easing in the next

couple of months." Consequently, by early next month, the Bank of England will accomplish the latest 75bn in asset purchases. Conclusion: In overall, it is not only the United Kingdom but also the European countries have faced to the difficult time over the period of the crisis. They have to find out and change their policy to recover and the economic in their country and in the world as well. The QE policy of the Bank of England has effected on output and inflation. However, the financial crisis is still the huge problem for them to recover. Therefore, the G20 meeting has been discussing and finding out the new approaches to have decisive resolution on Eurozone crisis.