In 2008, the world was thrust into what has been called the worst recession since the Second World War. Many countries responded with multibillion dollar stimulus packages in attempt to stave off the recession or at least dampen the effects. The British government took multiple steps to soften the blow of the global financial crisis. Relative to its counterparts, has the U.K. done enough?

The list below examines each country's response to the financial crisis on the basis of fiscal stimulus spending relative to GDP. Data estimates were provided by the IMF.

United Kingdom
Size of stimulus: 0.2 % of GDP (2008), 1.4% of GDP (2009)
GDP growth rates from 2008: 0.742%, GDP estimate for 2009: -4.385%

In October 2008, the British government announced a 500 billion pound stimulus package to shore up the nation's financial system. Like the U.S., banks did not use the capital to lend as they were expected to. In November, officials introduced a 15 billion pound stimulus package to reduce the country's sales tax and increase spending.

In December 2008, U.K. Prime Minister Gordon Brown announced an "ambitious" stimulus package agreed to by the nations of the European Union. As ambitious as the 200 billion euro deal may have seemed, the IMF warned that even more action was necessary to "avoid a long-lasting crisis."

Expected stimulus in 2010: -0.1% of GDP

United States of America
Size of stimulus: 1.1% of GDP (2008), 1.9% of GDP (2009)
GDP growth rates from 2008: 0.439%, GDP estimate for 2009: -2.73%

The United States was at the forefront of the global economic crisis. Domestically, two stimulus packages, totaling almost $1 trillion, were enacted to save ailing banks and jumpstart the struggling economy. Internationally, the Federal Reserve and foreign central banks worked together with coordinated rate cuts and liquidity infusions to unfreeze credit markets and prevent the collapse of financial markets worldwide.

An official end to the U.S. recession has yet to be declared; unemployment and a high deficit are lingering concerns. (Recovering from an economic slump isn't the easiest thing to do, but here are a few potential methods of rebuilding. Check out Profiting From A Consumerless Recovery.)

Expected stimulus in 2010: 2.9% of GDP

China
Size of stimulus: 0.4% of GDP (2008), 2% of GDP (2009)
GDP growth rates from 2008: 9.007%, GDP growth rate for 2009: 8.504%

China responded to the global crisis by announcing a stimulus plan in November 2008. The plan entailed a four trillion yuan stimulus, with about 30% coming from the central government and the remainder coming from the reallocation of funds at the provincial and local levels. Big ticket items included public infrastructure, earthquake reconstruction, rural development and technology advancement.

Expected stimulus in 2010: 2.0% of GDP

Japan
Size of stimulus relative to GDP: 0.4% (2008), 1.4% (2009)
GDP growth rates from 2008: -.705%, GDP estimate for 2009: -5.369%

Japanese banks were able to escape the worst of the crisis due to their relatively low exposure to toxic assets and limited involvement in securitization. However, the country's economy has suffered since it is heavily driven by exports. Japan enacted its first stimulus in 2008, and the country's economy emerged from the recession in the second quarter of 2009. In December 2009, deflation, the rising yen and lagging global economic conditions moved Japan's government to announce an additional 7.2 trillion yen stimulus package.

Expected stimulus in 2010: 0.4% of GDP

Australia

Size of stimulus: 0.7% of GDP (2008), 0.8% of GDP (2009)
GDP growth rates from 2008: 2.354%, GDP estimate for 2009: 0.732%

Decreased export revenue and falling commodity prices have taken a toll on the Australian economy. However, the economy "down under" remains stronger than many other nations. In October 2008, Australia orchestrated its first round of stimulus by offering bonus payments to first-time homebuyers and families based on income and children.

In February 2009, the Australian government approved the Nation Building - Economic Stimulus Plan, a $27 billion fiscal stimulus package aimed at supporting jobs and boosting growth. (The subprime meltdown gave rise to a mouthful of financial acronyms. Learn how to sort through this alphabet soup in Bailout Acronyms 101.)

Expected stimulus in 2010: 0.3% of GDP

Canada
Size of stimulus: 0% of GDP (2008), 1.5% of GDP (2009)
GDP growth rates from 2008: 0.414%, GDP estimate for 2009: -2.479%

Strong capitalization and conservative lending may have kept Canadian banks from going under, however, tight credit and rising commodity prices have hurt the Canadian economy. Canada was the only G7 nation to experience positive GDP growth during the second and third quarters of 2008, and the Canadian economy shrank by less than all other G7 nations in the final quarter of the year. In January 2009, the Canadian government introduced its Economic Action Plan to combat the crisis, boost the country's economy and create jobs.

Expected stimulus in 2010: 1.3% of GDP

Germany
Size of stimulus: 0% of GDP (2008), 1.5% of GDP (2009)
GDP growth rates from 2008: 1.248%, GDP estimate for 2009: -5.297%

Decreased demand for industrial goods sent German exports downhill. In November 2008, the German government passed a $29 billion stimulus package, which was met with skepticism by critics claiming less than half of the money was new. Additional stimulus measures were passed in January 2009, when the German government authorized a $70 billion plan including personal tax cuts and increases in spending.

Expected stimulus in 2010: 2.0% of GDP

France
Size of stimulus: 0% of GDP (2008), 0.7% of GDP (2009)
GDP growth rates from 2008: .323%, GDP estimate for 2009: -2.358%

In December 2008, the French government announced a 26 billion euro stimulus package to go into effect in 2009. The plan provided several initiatives such as making cash payments to the poor, offering increased rebates to new car buyers and boosting funding for modernization of rail infrastructure, energy and the postal service. (The bear market of 2008 was a game-changer for many investors. Find out what lessons you can take away from it in 5 Lessons From The Recession.)

Expected stimulus in 2010: 0% of GDP

Italy
Size of stimulus: 0% of GDP (2008), 0.2% of GDP (2009)
GDP growth rates from 2008: -1.04%, GDP estimate for 2009: -5.145%

Italy is often referred to as "the sick man of Europe." Coincidentally, the country responded to the global financial crisis with the smallest stimulus package (relative to GDP) on our list. In November 2008, the Italian government approved a $103 billion stimulus package. The plan drew criticism from economists saying the vast majority of the package was the "recycling of funds already available."

In February 2009, Italy passed an additional stimulus package worth $2.56 billion.

Expected stimulus in 2010: 0.1% of GDP

The Bottom Line

Although the U.K. may not have responded with the world's most robust stimulus package, the government acted with relatively quick and varied measures to respond to unprecedented turmoil. Unfortunately, the impact of such massive efforts cannot be felt or measured as quickly as they were enacted. Only time will tell if the efforts were enough.

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