As the title says – what exactly causes recession? Especially in today’s times. I understand that Covid caused countries to spend more money, but on the other hand there was lots of remote work going on and big companies seemed to be doing quite fine (at least as far as I am aware). I am currently living in UK and I am specifically interested what causes recession in UK.
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There is no single unique cause to a recession. For example, the recession associated with the financial crisis of 2007-09 was caused by a collapse in the housing bubble and the subsequent impairment of the financial sector which then spread to the real sector.
The current recession is less about covid and more about the war in ukraine and inflation. For one, the war in the ukraine and the economic sanctions against russia after the invasion and associated rise in energy prices. An additional factor is the rise in inflation which forces central banks to react to it by raising interest rates which causes economic activity to decline.
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