Economic Downturn Effects On The Uk Hotel Industry
The UK hotel industry, as well as the hotel industry world wide, has been hit hard by the recession which started at the end of 2007 and is predicted by many to last until at least 2010. In the course of a few months the UK's economy has gone from boom to crisis and by early 2009 the attitudes and beliefs of consumers and businesses in the marketplace had altered radically from previous optimism (Mintel Reforecasts 2009 [online]).
Prior to the 'credit crunch' which commenced in August 2007 when the European Central Bank and the US Federal Reserve put £45bn into the financial markets (Elliott 2008 [online]), Europe, the USA and the UK were enjoying an economic boom with rising house prices and high consumer confidence (Budworth 2008 [online]). Gross Domestic Product (GDP) rose to £381,565 Million in 2007, and household disposable income per capita to £14,321 in the same year (Key Note 2008, p. 18). During these 'boom' years, lending was high and borrowers able to raise large sums of money due to relaxed lending restrictions by banks. Individuals whose circumstances would have at one time barred them from borrowing were allowed to access many times their salary (Budworth 2008 [online]). Debts secured upon property were sold on to investors. Property prices thus became vastly inflated creating a 'bubble' which burst when borrowers started to default on their loans and the value of the investments therefore fell heavily. The huge losses by the banks leading to the collapse of Lehman Brothers in the US and the near collapse of Northern Rock in the UK meant that lending became much more difficult and banks stricter about who they lend money to. (Budworth 2008 [online]). The resulting shortage of funds due to fears about lending and lack of loans has led to a downturn in the economy, falling house prices and increasing unemployment with many firms going out of business altogether and many more making drastic savings (Budworth 2008 [online]). Further consequences include a vast increase in public spending which is predicted to take years to pay off, a predicted rise in unemployment (by the British Chamber of Commerce) to 3.2 million, wage freezes or cuts and massive job losses (The Economy News 2009 [online]). The collapse in available credit started in the USA but in these days of global trading the implications were soon felt around the world with the UK quickly facing problems. Germany, France and Italy - the three largest economies in the Eurozone - were officially in recession by late 2008, and others rapidly followed suit. Both Spain and Ireland have witnessed a housing bubble burst and contraction in wider economic activity (Foresight 2008, p. 7).(责任编辑：BUG)