Vicious Circle of Poverty

The international recession has been of great concern for the United Kingdom during the past few months but unfortunately the country was itself engulfed by the same. But this was when the country was itself going through the same problems and was a victim of it itself. During the last few months, there is no problem with the United Kingdom when it comes to recession as there are no prices falling any further and investment is also a lot more stable but the spending habits of the people are still very much the same as they are more inclined towards saving than spending still.

Now this could be very much possible mainly because the businesses are not flourishing as good as an investor would like them to be before deciding to invest in there. The biggest problem is what we term as the “Vicious Circle of Poverty” in the economic terms. There are no new jobs being created, at least not at a level at which there is joblessness, and this is certainly a serious issue with the jobs as we all know. Along with this joblessness comes the deadly deflation which is mainly due to the reason that people are unable to spend.

Now when there will be no spending and the people would not be inclined towards buying, it will surely hurt the demand of the goods in the country and if there is no demand there is no need for supply which ultimately leads to joblessness because if there is no need for supply there is no reason why a factory owner would pay labourers? With limited demand there will be limited production and limited production leads to joblessness making it a deadly circle of which it is almost impossible to move out. The only way out is government funding and unless that happens the internal and external environments in the UK as well as outside it would not favour the economic conditions.