The United Kingdom has a fiercely independent, international trading and developed economy and has sixth largest economy in the world by nominal GDP, eighth-largest by purchasing power parity and third largest in Europe after Germany and France. London is the world’s second largest financial center after New York. In the 18th century it was the world’s largest and first industrialized country, and was also able to be at forefront of technological advances which gave strong economic advantage to other countries in the world. UK possessed a dominant, influential, and powerful role in global economy during the 19th and early 20th centuries. The aerospace industry and the pharmaceutical industry are the most important industries of the economy of Great Britain. Economy of United Kingdom is boosted by its oil and gas reserves. In 1979 most of the companies owned by state were privatized and opened to public competition and were listed in the UKs financial market.
Economy of United Kingdom
United Kingdom has a developed economy UK has sixth largest economy in the world by nominal GDP, eighth-largest by purchasing power parity with GDP (Nominal) and GDP(PPP) of $2.44 trillion and 2.336 trillion respectively in 2012. UK as a member of Europe has a single market which ensures free movement of goods, services and capital within the states of EU.
In spite of being member of EU, UK maintains its own currency rather than converting it into euro and today the currency of the UK is the pound sterling, which is also the world’s third largest reserve currency after the U.S. dollar and the euro. In UK agriculture, industries and services accounts for 0.7%, 21.1% and 78.2% of total GDP respectively. And in spite of only 0.7% of agriculture contribution in total GDP, agriculture is still considered as an important part of the economy and it produces 60% of UK’s food needs. UK is the sixth largest manufacture of goods in the world. Automotive or aerospace equipment are major contributors in UK economy. Aerospace industry of UK is second largest in world. And in UK economy services remain the most dominant component of UK economy. Finance and banking is the major contributor in economy. London is the world’s largest financial centre.
The UK economy has been weak in recent years following the late 2000 recession with growth largely flat since 2010. The UK experienced a recession in the final quarter of 2008, with many periods of consecutive negative growth and unemployment has held steady at levels of 7.7%. in 2009 and by January 2012 the unemployment rate among 18 to 24-year-olds had risen from 11.9% to 22.5%, the highest since current records began in 1992. Total debts of government roses from 44.4% of GDP in 2007 TO 82.9 % of GDP in 2011. The poverty line in the UK is commonly defined as being 60% of the median household income.[nb 10] In 2007–2008 13.5 million people, or 22% of the population, lived below this line. This is a higher level of relative poverty than all but four other EU members. In the same year 4.0 million children, 31% of the total, lived in households below the poverty line after housing costs were taken into account.
UK’s population in 2012 was 63.244 million. out of total population 17.3 % are children below 15, 65.4 % are adult between 15 to 64 and 17.3% are aged above 65 years. UK has 20th largest labor force with almost 31.9 million workers. And out of total labor force 1.4% are employed in agriculture, 18.2% and 80.4% are employed in industries and services respectively.
UK‘s import and export activity are key contributor to the overall economic growth. UK is 7th leading imported and 12th leading exporter in the world. UK hold massive deficit on trade in good and services with rest of the world after USA. And in 2014 is trade deficit has decreased from 1.7 billion pounds in February 2014 to 1.3 billion pound in march 2014 because export of goods like finished manufactures, including jewellary and car increased by 4.9% between this time and import increased by only 2.8 over the same period.
Problems faced by UK economy
Major problems faced by UK economy are the fiscal or budget deficit which has a related impact on the level of national debt and the level of inflation. Another major problem is persistently high unemployment and stagnant economic growth. Unemployment increases relative poverty in the UK and in particularly increases stress causing alienation and reduced living standards. It adds to the budget deficit. The government has to spend more on benefits, and they receive lower taxes. Many of the UK problems are due to domestic factors like low spending, negative output gap, and low investment. However, UK has open economy and hugely depends on trade with other countries, especially Europe, and is hugely dependent on what happen around that is why whatever happens in Euro affects UK. The continued recession and economic uncertainty in the Euro zone is having an adverse impact on UK confidence and UK exports. Agriculture may soon face labor crises as there is lack of interest for agriculture job and due to aging labor force.
UK economy in 2014
The UK economy grew by 0.8% in the first three months of 2014. Unemployment has dropped below 7% for the first time since the recession and employment has seen the biggest annual jump and, re-scoring could also boost output and employment in both manufacturing and services in 2014 and 2015. Most sectors of the economy are showing positive growth trends, with recent signs that business investment is also starting to pick up. Whereas UK economy has recovered in jobs but has been poor in productivity and wages. However major part of the economy is growing but the government still need to go through creating jobs and educated work force, supporting business and take measures to help with the cost of living.
Detailed micro economics data needs to be analyzed for a period of 5 years.