UK Economy

The United Kingdom of Great Britain and Northern Ireland is also known as UK, United Kingdom or Britain. United Kingdom is located in the north western coast of the European Continent. UK is a sovereign state. It is referred to as an island country as its primary territory consists of parts of one or more islands. United Kingdom consists of four counties. They are: England, Northern Ireland, Scotland, s and Wales. It is a unitary state as all these countries are governed as a single unit.

United Kingdom is a member of European Union, G 8, G-20, World Trade Organization, Common Wealth of Nations, United Nations Security Council, NATO, Organization for Economic Cooperation and Development (OECD). United Kingdom is a well developed country. It has a rich economy brought up by economies of its individual countries England, Scotland, Wales and Northern Ireland. Landon which is the capital of UK and England is the most important financial center for international business and commerce. UK is one of the most important globalised countries of the world.

Economic History

In 19th century the period of British Empire, UK had the strongest economy in the world. Much of the profit was brought by its trade system which transported resources, people and capital. Due to large war expenditure during the Second World War along with end of British Empire caused a great decline in United Kingdom’s economy.

In 1979, the situation started reverting by the advent of Prime Minister Margaret Thatcher. He helped UK to get rid of its “sick man of Europe” or simply the economic difficulty by breaking the existing unions and shredding them in the free market.

The 1990 recession had adversely affected the United Kingdom’s economy. There was 8% decline in the UK’s economy with increased unemployment. But this situation has got reverted in 1993 when the recession ended.

Recent Economic Details

As per the report of Office of National Statistics, UK was hit by recession during the second quarter of 2008. There was a 30 % decline in the value of United Kingdom’s currency Pound Sterling compared to other main currencies. There was a great increase in the number of unemployment.
In 2009 the United Kingdom’s economy started declining further which had adversely affected all sectors including real estate, manufacturing, employment etc. The Gross Primary Parite of UK was found to have declined by 2.4% in the first quarter of 2009. During second quater of 2009, there was a 0.6% decline seen in the Gross Primary Parity of UK which then followed a 0.2% decline in the next quarter.

In the first quarter of 2010, the economy had grown by 0.3%, in the second quarter there was further improvement with a growth rate of 0.7%. As per the prediction of Office of National Statistics (ONS), an increase in GDP by 1.6 % is expected in UK.

Economic Sectors

The important economic sectors of UK are:

Industries:

  • The agricultural industry is one of the most important industries in UK. The agricultural sector of UK is highly developed. The agricultural practices are highly mechanized and according to European standard. The UK’s agricultural sector is able to provide about 60 % of its food needs. There are around 535,000 employers engaged in this sector which forms around 1.6 % of the UK’s work force.

  • The fishing industry is also much importance. The major fishing areas includes Fleetwood, Peter head, Kingston upon Hull etc. importance fishes available here are sole, herring, salmon etc.

Production

  • Manufacturing industries:  The manufacturing industries contribute about 16% towards UK’s economy. This sector is also able to provide about 13% of United Kingdoms employment. The most important manufacturing industries of United Kingdom includes electrical and paper products, textile, food products, chemicals, automation equipments, electronics, metals, cement, coal, paper transport industries which includes aircraft building, ship building, train, motor vehicles etc.

  • Electricity, gas and water supply: The Gas, electricity, and water supply is of very much importance in United Kingdom’s economy. In 2004 it was reported that electricity, gas and water supply has provided an estimated amount of £ 17,103 million towards United Kingdom’s economy.

  • Mining: Mining has contributed a lot towards the UK’s economy. The most important among this is the coal mining. In 2004, it was estimated that mining contributed about £ 21,876 millions towards the United Kingdom’s economy

  • Construction: The construction sector of United Kingdom is of much importance. In 2004, the construction alone had added about£64,747 millions towards the UK’s economy.

Service Sector

  • Trade: The trade includes both wholesale and retail. The United Kingdom had a good export as well as import service. In 2004, United Kingdom’s trade had brought about £ 127,520 millions towards its economy.

  • Transport and Storage: The transport and storage sectors have together contributed about £ 49,516 millions in 2004 towards the UK’s economy.

  • Communication department: In 2004, the various communication sectors of United Kingdom have provided about £ 29,762 millions towards its economy.

  • Real estate: There was a great increase in the property price from 2001 – 2007. The real estate alone accounted for about £ 175,333 millions towards UK’s economy.

  • Other service sectors:  Other most important service sectors which contributed a lot towards UK’s economy are defense, education, health and social work, Hotels and Restaurants etc.GDP of UK from 1990-2005

As per Gross Domestic Productivity (GDP) and Purchasing Power Parity (PPP), UK is Ranked 6th largest in the world. Among the countries of European Continent, United Kingdom is ranked 2nd as per the Purchasing Power Parity and ranked 3rd as per the Gross Domestic Productivity. The United Kingdom is ranked 19th in the world as per PPP per capital. The GDP of UK from 1990-2005 expressed in millions of pound sterling is as follows:

  • GDP in 1990- 557,300
  • GDP in 1995- 718,383
  • GDP in 2000- 953,576
  • GDP in 2005- 1,209,334