IntroductionThis essay focuses on corporate governance, regulation, leverage and incentives in the financial services sector. This essay also includes the UK credit crisis and the global economic crisis. The British economy is in recession. Due to the decline in demand for goods and services, production decreases and unemployment increases. A drop in demand has an effect on industries. In some cases, businesses are closing and job losses are increasing. The world has become a small village thanks to the Internet, leading to global competition. The UK market is suffering because production costs are higher than in other parts of the world such as India and China. On the other hand, the credit crunch due to bank failures. However, China and India have healthy economic growth that benefits from the US financial crisis (© Emerald Group Publishing Limited, 2009). The main function of the Bank of England is to control the money supply in the British economy by manipulating interest rates. In a recession, the Bank of England will continue to cut interest rates to encourage businesses to invest in plant and machinery and it will become cheaper for consumers to borrow, ultimately leading to a boost in demand of goods and services and to correct unemployment levels. as well as more goods and services to increase demand and employers will find it more profitable to employ more people (© Bank of England, 2009). The Bank of England's financial system plays an important role in the United Kingdom's economy and modern life. This financial system attempts to bring savers and investors closer together, which will benefit them and the UK economy (© Bank of England, 2009). Corporate governance is a set of relationships between the management of a company, the shareholders...... paper ......rporate Reporting: corporate governance, The combined code. 2nd edition. UKKeinert.C (2008) Corporate social responsibility as an international strategy. A Springer CompanySloman.J (2009) Economy and business environment: demand and consumer. 2nd edition. England. FT Prentice Hall. Electronic Journal Databases Emerald Group Publishing Limited (2009) “Special Issue on Changing Global Growth Patterns”. Available at: http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=4F280BA70223188AC2C337BFF751580D?contentType=NonArticle&contentId=1747168 [Accessed 6 November 2009]Emerald Group Publishing Limited (2009) “What is corporate governance”? pp624.[online] Available at: http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=/published/emeraldfulltextarticle/pdf/2680070507.pdf [Accessed October 27, 2009]