Economy of the United Kingdom
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"GB plc" and "UK plc" redirect here. For the type of corporate entity, see Public
limited company.
Economy of the United Kingdom
The City of London, the financial hub of the UK.
Currency Pound sterling (GBP, £)
Fiscal year 6 April – 5 April
Trade organisations WTO, AIIB, OECD
Country group Developed/Advanced[1]
High-income economy[2]
Statistics
Population 66,647,112 (1 January 2019)[3]
GDP $2.744 trillion (nominal; 2019 est.)[4]
$3.131 trillion (PPP; 2019 est.)[4]
GDP rank 6th (nominal, 2019)
9th (PPP, 2019)
GDP growth 1.9% (2017) 1.3% (2018)
1.4% (2019)[5] 1.4% (2020e)[4]
GDP per capita $41,030 (nominal; 2019 est.)[4]
$46,827 (PPP; 2019 est.)[4]
GDP per capita rank 21st (nominal, 2019)
27th (PPP, 2019)
GDP by sector agriculture: 0.6%
industry: 19.2%
services: 80.2%
(2016 est.)
Inflation (CPI) 1.3% (December 2019)[6]
RPI: 2.2% (December 2019)
1.8% (2019)[6]
Base borrowing rate 0.25%
Population below poverty 22% in poverty (2018)[7]
line
23.6% at risk of poverty or social
exclusion (2018 provisional)[8]
Gini coefficient 34.2 medium (2018, provisional)[9]
Human Development Index 0.920 very high (2018)[10] (15th)
0.845 very high IHDI (2018)[11]
Labour force 34,280,575 (2019)[12]
78.7% employment rate (2018)[13]
Labour force by occupation agriculture: 1.5%
industry: 18.8%
services: 79.7%
(2011 est.)[14]
Unemployment 3.7% (December 2019)[15]
11.0% youth unemployment (Q4-2019)[16]
Average gross salary £585 weekly median (April 2019)[17]
Main industries
List[show]
Ease-of-doing-business rank 8th (very easy, 2020)[18]
External
Exports $795;billion (4th; 2019 est.)[19]
Export goods Manufactured goods
fuels
chemicals
food
beverages
tobacco
Main export partners European Union 48.8%
United States 18.6%
Germany 8.7%
Netherlands 6.9%
France 6.6%
Ireland 6.0%
China 3.6%
Italy 3.1%
Switzerland 3.1%
Belgium 3.1% (2018)[20]
Imports $876.6 billion (5th; 2018 est.)[21]
Import goods Manufactured goods
machinery
fuels
foodstuffs
Main import partners European Union 51.2%
Germany 11.6%
United States 10.9%
Netherlands 7.4%
China 6.8%
France 6.4%
Spain 4.9%
Belgium 4.4% (2018)[20]
FDI stock Inward: $1.196 trillion
Outward: $1.443 trillion (2016)[22]
Current account −£15.8 billion (2019)[23]
Gross external debt $7.499 trillion (March 2017)[24] (2nd)
Net international $575 billion (2016)[25]
investment position
Public finances
Public debt 85.8% of GDP (2018)[26]
Budget balance £25.5 billion (2018–2019 FY)[27]
Revenues £1.04 trillion (2019–2020 FY)[28]
$984 billion (2018 est. CIA)
Expenses £842 billion (2019-2020 FY)[28]
$1.11 trillion (2018 est. CIA)
Economic aid ODA£14 Billion (2017)[29]
Credit rating Standard & Poor's:[30]
AA (Domestic)
AA (Foreign)
AAA (T&C Assessment)
Outlook: Negative
Moody's:[31]
Aa2
Outlook: Stable
Fitch:[32]
AA
Outlook: Negative
Scope:[33]
AA
Outlook: Negative
Foreign reserves $164.2 billion (31 March 2018)[34]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.
The economy of the United Kingdom is highly developed and market-orientated.[35]
[36]
It is the sixth-largest national economy in the world measured by nominal gross
domestic product (GDP), ninth-largest by purchasing power parity (PPP), and twenty
second-largest by GDP per capita, comprising 3.3% of world GDP.[37]
In 2016, the UK was the tenth-largest goods exporter in the world and the fifth-
largest goods importer. It also had the second-largest inward foreign direct
investment,[38] and the third-largest outward foreign direct investment.[39] The UK is one
of the most globalised economies,[40] and it is composed
of England, Scotland, Wales and Northern Ireland.[a] With more the 52% of its imports
and its exports, the European Union, including its 27 members states, remains in
2020 one notable trade partner from the UK.
The service sector dominates, contributing around 80% of GDP;[41] the financial
services industry is particularly important, and London is the second-largest financial
centre in the world.[42] Britain's aerospace industry is the second-largest national
aerospace industry.[43] Its pharmaceutical industry, the tenth-largest in the world,
[44]
plays an important role in the economy. Of the world's 500 largest companies, 26
are headquartered in the UK.[45] The economy is boosted by North Sea oil and
gas production; its reserves were estimated at 2.8 billion barrels in 2016,[46] although
it has been a net importer of oil since 2005.[47] There are significant regional variations
in prosperity, with South East England and North East Scotland being the richest
areas per capita. The size of London's economy makes it the largest city by GDP in
Europe.[48]
In the 18th century the UK was the first country to industrialise,[49][50][51] and during the
19th century it had a dominant role in the global economy, [52] accounting for 9.1% of
the world's GDP in 1870.[53] The Second Industrial Revolution was also taking place
rapidly in the United States and the German Empire; this presented an increasing
economic challenge for the UK. The costs of fighting World War I and World
War II further weakened the UK's relative position. In the 21st century, however, the
UK remains a great power with the ability to project power and influence around the
world.[54][55][56][57][58]
Government involvement is primarily exercised by Her Majesty's Treasury, headed
by the Chancellor of the Exchequer, and the Department for Business, Energy and
Industrial Strategy. Since 1979 management of the economy has followed a
broadly laissez-faire approach.[35][36][59][60][61][62] The Bank of England is the UK's central
bank, and since 1997 its Monetary Policy Committee has been responsible for
setting interest rates, quantitative easing, and forward guidance.
The currency of the UK is the pound sterling, which is the world's fourth-
largest reserve currency after the United States dollar, the Euro and the Japanese
yen, and is also one of the 10 most-valued[clarification needed] currencies in the world.
The UK is a member of the Commonwealth, the G7, the G20, the International
Monetary Fund, the Organisation for Security and Co-operation in Europe, NATO,
the United Nations Security Council, the World Bank, the World Trade
Organization, Asian Infrastructure Investment Bank and the United Nations.
The Bank of England (BoE) and several financial bodies have warned that Brexit
poses severe challenges to the UK economy and a no-deal exit from the EU could
have profound adverse implications. [63]
Contents
1History
o 1.11945 to 1979
o 1.21979 to 1997
o 1.31997 to 2008
o 1.42009 to 2020
o 1.52020 to present
2Government spending and economic management
o 2.1Taxation
3Sectors
o 3.1Agriculture
o 3.2Construction
o 3.3Production industries
3.3.1Electricity, gas and water supply
3.3.2Manufacturing
3.3.3Mining, quarrying and hydrocarbons
o 3.4Service industries
o 3.5Exports
3.5.1Creative industries
3.5.2Education, health and social work
3.5.3Financial and business services
3.5.4Hotels and restaurants
3.5.5Informal
3.5.6Public administration and defence
3.5.7Real estate and renting activities
3.5.8Tourism
3.5.9Transport, storage and communication
3.5.10Wholesale and retail trade
4Currency
o 4.1Exchange rates
5Economy by region
6Trade
7Investment
8Mergers and acquisitions
9European Union membership
10Poverty
11Data
12Notes
13References
14External links
History[edit]
Main article: Economic history of the United Kingdom
1945 to 1979[edit]
After the Second World War, a new Labour government fully nationalised the Bank
of England, civil aviation, telephone networks, railways, gas, electricity, and the coal,
iron and steel industries, affecting 2.3 million workers. [64] Post-war, the United
Kingdom enjoyed a long period without a major recession; there was a rapid growth
in prosperity in the 1950s and 1960s, with unemployment staying low and not
exceeding 3.5% until the early 1970s.[65] The annual rate of growth between 1960 and
1973 averaged 2.9%, although this figure was far behind other European countries
such as France, West Germany and Italy.[66]
Deindustrialisation meant the closure of operations in mining, heavy industry, and
manufacturing, resulting in the loss of highly paid working-class jobs. [67] The UK's
share of manufacturing output had risen from 9.5% in 1830 during the Industrial
Revolution to 22.9% in the 1870s. It fell to 13.6% by 1913, 10.7% by 1938, and 4.9%
by 1973.[68] Overseas competition, lack of innovation, trade unionism, the welfare
state, loss of the British Empire, and cultural attitudes have all been put forward as
explanations.[69] It reached crisis point in the 1970s against the backdrop of a
worldwide energy crisis, high inflation, and a dramatic influx of low-cost
manufactured goods from Asia.[70]
Workforce distribution in Great Britain from 1841–1911, and in England and Wales from 1921–2011
During the 1973 oil crisis, the 1973–74 stock market crash, and the secondary
banking crisis of 1973–75, the British economy fell into the 1973–75 recession and
the government of Edward Heath was ousted by the Labour Party under Harold
Wilson, which had previously governed from 1964 to 1970. Wilson formed a minority
government in March 1974 after the general election on 28 February ended in
a hung parliament. Wilson secured a three-seat overall majority in a second election
in October that year.
The UK recorded weaker growth than many other European nations in the 1970s;
even after the recession, the economy was blighted by rising unemployment and
double-digit inflation, which exceeded 20% more than once and was rarely below
10% after 1973.
In 1976, the UK was forced to apply for a loan of £2.3 billion from the International
Monetary Fund. Denis Healey, then Chancellor of the Exchequer, was required to
implement public spending cuts and other economic reforms in order to secure the
loan, and for a while the British economy improved, with growth of 4.3% in early
1979.[clarification needed] However, following the Winter of Discontent, when the UK was hit by
numerous public sector strikes, the government of James Callaghan lost a vote of no
confidence in March 1979. This triggered the general election on 3 May 1979 which
resulted in Margaret Thatcher's Conservative Party forming a new government.
1979 to 1997[edit]
A new period of neo-liberal economics began with this election. During the 1980s,
many state-owned industries and utilities were privatised, taxes cut, trade union
reforms passed and markets deregulated. GDP fell by 5.9% initially, [71] but growth
subsequently returned and rose to an annual rate of 5% at its peak in 1988, one of
the highest rates of any country in Europe.[72][73]
Unemployment rates in the United Kingdom from 1881 until 2017. In the 1980s, unemployment reached
levels not seen in the UK since the Great Depression of the 1930s.
Thatcher's modernisation of the economy was far from trouble-free; her battle with
inflation, which in 1980 had risen to 21.9%, resulted in a substantial increase in
unemployment from 5.3% in 1979 to over 10.4% by the start of 1982, peaking at
nearly 11.9% in 1984 – a level not seen in Britain since the Great Depression.[74] The
rise in unemployment coincided with the early 1980s global recession, after which
UK GDP did not reach its pre-recession rate until 1983. In spite of this, Thatcher was
re-elected in June 1983 with a landslide majority. Inflation had fallen to 3.7%, while
interest rates were relatively high at 9.56%.[74]
The increase in unemployment was largely due to the government's economic policy
which resulted in the closure of outdated factories and coal pits. Manufacturing in
England and Wales declined from around 38% of jobs in 1961 to around 22% in
1981.[75] This trend continued for most of the 1980s, with newer industries and the
service sector enjoying significant growth. Many jobs were also lost as
manufacturing became more efficient and fewer people were required to work in the
sector. Unemployment had fallen below 3 million by the time of Thatcher's third
successive election victory in June 1987; and by the end of 1989 it was down to
1.6 million.[76]
