Recession is when the economy has undergone two executive quarters of negative economic growth. In the year 2008, the employment levels decreased as the UK was experiencing recession during that year. It took the UK five years to recover. During this recession, unemployment levels were 5.7%, however after five years the unemployment rate had increased to 7.6%. This shows us that over time unemployment rates have increased. During recession, unemployment starts to rise and consumer spending begins to decrease. In the year 2005, Sainsbury’s believe that they had the slowest sales growth. Articles show Sainsbury’s had warned that the UK can go back into recession because of these slow sales growth. If Sainsbury’s experience recession, the employment levels will decrease, as employers will not have enough money to pay their employees. The wage of employees might also decrease as Sainsbury’s will not have enough money due to the negative economic growth of the company. In the year 2017 Sainsbury’s decided to cut down 2000 jobs within the uk, this is because it will save the company £500 million.
The rate of inflation measures the annual increase in the average level of prices within the economy. In the year 208, the inflation rate is 3%. The rate has risen compared to previous years such as 2016 in which the inflation rate was 0.2%. An increase in the level of inflation can cause many problems for businesses such as Sainsbury’s. these problems may include:
Reduced profit levels if firms are unable to pass on increased costs of materials and power by increasing the prices they charge to their own customers. This is because they operate within competitive markets. Last year (2017), Sainsbury’s had to deal with less sales, which meant their profit levels were low. This was because less sales were being made and they had higher wage costs since they had quite a lot of employees. Due to the fact that Sainsbury’s were facing negative growth problems, they are add