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Economy of the United Kingdom

The United Kingdom, a leading trading power[?] and financial center[?], is one of the four largest economies[?] of Western Europe. Over the past two decades the government has privatised many state enterprises. Agriculture is intensive, highly mechanised[?], and efficient by European standards, producing about 60% of food needs with only 1% of the labor force.

The UK has large coal, natural gas, and oil reserves; primary energy production accounts for 10% of GDP, one of the highest shares of any industrial nation[?]. service industries[?], particularly banking, insurance, and business services[?], account by far for the largest proportion of GDP while manufacturing continues to decline in importance. GDP growth slipped in 2001-02 as the global downturn, the high value of the pound, and the bursting of the "new economy[?]" bubble hurt manufacturing and exports[?]. Still, the economy is one of the strongest in Europe; inflation, interest rates, and unemployment remain low.

The relatively good economic performance has complicated the Blair government's efforts to make a case for Britain to join the Euro. The British Prime Minister has pledged to hold a public referendum if membership meets Chancellor of the Exchequer Gordon Brown's five economic tests[?]. The tests are:

  1. Are business cycles and economic structures compatible with European interest rates on a permanent basis?
  2. If problems emerge, is there sufficient flexibility to deal with them?
  3. What impact would entry into the euro have on the UK's financial services industry?
  4. Would joining the euro create better conditions for firms making long-term decisions to invest in Britain?
  5. Would joining the euro promote higher growth, stability and a lasting increase in jobs?

When assessing the tests, Gordon Brown concluded that while the decision was close, the United Kingdom should not yet join the Euro. In particular, he cited fluctuations in house prices[?] as a barrier to immediate entry. The tests will be reassessed in the future. Public opinion polls[?] show that a majority of Britons are currently opposed to the single currency[?].

The government has increased funding of education, transport, and the National Health Service, at a cost in higher taxes. The government has been criticised by the Conservatives and Liberal Democrats for its stealth tax[?] raises.

Statistics

GDP: purchasing power parity - $1.29 trillion (1999 est.)

GDP - real growth rate: 1.9% (1999 est.)

GDP - per capita: purchasing power parity - $21,800 (1999 est.)

GDP - composition by sector:
agriculture: 1.7%
industry: 25.3%
services: 73% (1998)

Population below poverty line: 17%

Household income or consumption by percentage share:
lowest 10%: 2.4%
highest 10%: 24.7% (1986)

Inflation rate (consumer prices): 2.3% (1999)

Labor force: 29.2 million (1999)

Labor force - by occupation: services 68.9%, manufacturing and construction 17.5%, government 11.3%, energy 1.2%, agriculture 1.1% (1996)

Unemployment rate: 6% (1999)

Budget:
revenues: $541 billion
expenditures: $507.5 billion, including capital expenditures of $35.1 billion (FY98/99)

Industries: production machinery including machine tools, electric power equipment, automation equipment, railroad equipment, shipbuilding, aircraft, motor vehicles and parts, electronics and communications equipment, metals, chemicals, coal, petroleum, paper and paper products, food processing, textiles, clothing, and other consumer goods

Industrial production growth rate: -0.3% (1999)

Electricity - production: 343.099 billion kWh (1998)

Electricity - production by source:
fossil fuel: 68.24%
hydro: 1.49%
nuclear: 28.48%
other: 1.79% (1998)

Electricity - consumption: 331.482 billion kWh (1998)

Electricity - exports: 200 million kWh (1998)

Electricity - imports: 12.6 billion kWh (1998)

Agriculture - products: cereals, oilseed, potatoes, vegetables; cattle, sheep, poultry; fish

Exports: $271 billion (f.o.b., 1998)

Exports - commodities: manufactured goods, fuels, chemicals; food, beverages, tobacco

Exports - partners: EU 58% (Germany 12%, France 10%, Netherlands 8%), US 13% (1998)

Imports: $305.9 billion (f.o.b., 1998)

Imports - commodities: manufactured goods, machinery, fuels; foodstuffs

Imports - partners: EU 53% (Germany 13%, France 9%, Netherlands 7%, Italy 5%), US 14% (1998)

Debt - external: $NA

Economic aid - donor: ODA, $3.4 billion (1997)

Currency: 1 British pound = 100 pence

Exchange rates: British pounds per US$1 - 0.6092 (January 2000), 0.6180 (1999), 0.6037 (1998), 0.6106 (1997), 0.6403 (1996), 0.6335 (1995). British coinage

Fiscal year: 1 April - 31 March

See also : United Kingdom

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