The e¬¬conomy of the United Kingdom

2.4.3 Financial and business services

This industry added gross value of £86,145 million to the UK economy in 2004. The UK's exports of financial and business services make a significant positive contribution towards the country's balance of payments.

London is a major centre for international business and commerce and is one of the three "command centres" of the global economy (alongside New York City and Tokyo). There are over 500 banks with offices in London, and it is the leading international centre for banking, insurance, Eurobonds, foreign exchange trading and energy futures. London's financial services industry is primarily based in the City of London and Canary Wharf. The City houses the London Stock Exchange, the London International Financial Futures and Options Exchange, the London Metal Exchange, Lloyds of London, and the Bank of England. Canary Wharf began development in the 1980s and is now home to major financial institutions such as Barclays Bank, Citigroup and HSBC, as well as the UK Financial Services Authority) London is also a major centre for other business and professional services, and four of the six largest law firms in the world are headquartered there.

Several other major UK cities have large financial sectors and related services. Edinburgh has one of the large financial centres in Europe and is home to the headquarters of the Royal Bank of Scotland Group and Standard Life. Leeds is now the UK's largest centre for business and financial services outside London, and the largest centre for legal services in the UK after London.

2.4.4 Real estate and renting activities

The real estate and renting activities sector includes the letting of dwellings and other related business support activities. The Blue Book 2006 reports that the lettings industry added gross value of £83,037 million to the UK economy in 2004 while other real estate and business support activities added gross value of £175,333 million. Notable real estate companies in the United Kingdom include British Land and The Peel Group.

The UK property market boomed for the seven years up to 2008 and in some areas property trebled in value over that period. The increase in property prices had a number of causes: low interest rates, credit growth, economic growth, rapid growth in buy to-let property investment, foreign property investment in London and planning restrictions on the supply of new housing.

2.4.5 Tourism

Tourism is very important to the British economy. With over 27 million tourists arriving in 2004, the United Kingdom is ranked as the sixth major tourist destination in the world. London, by a considerable margin, is the most visited city in the world with 15.6 million visitors in 2006, ahead of 2nd placed Bangkok (10.4 million visitors) and 3rd placed Paris (9.7 million).

2.4.6 Transport, storage and communication

The Blue Book 2006 reports that the transport and storage industry added gross value of £49,516 million to the UK economy in 2004 while the communication industry added a gross value of £29,762 million.

The UK has a radial road network of 46,904 kilometres (29,145 mi) of main roads, with a motorway network of 3,497 kilometres (2,173 mi). There are a further 213,750 kilometres (132,818 mi) of paved roads. There is a railway infrastructure company Network Rail, with train operating companies including foreign state owned companies including Deutsche Bahn AG of 16,116 km (10,014 mi) in Great Britain and 303 route km (189 route mi) in Northern Ireland run by Northern Ireland Railways, which carries over 18,000 passenger trains and 1,000 freight trains per day. Urban rail networks are well developed in Glasgow, Liverpool and London as well as other cities. Plans are now being considered to build new high speed lines linking all major cities by 2025.

The Highways Agency is the executive agency responsible for trunk roads and motorways in England apart from the privately owned and operated M6 Toll. The Department for Transport states that traffic congestion is one of the most serious transport problems and that it could cost England an extra £22 billion in wasted time by 2025 if left unchecked. According to the government-sponsored Eddington report of 2006, congestion is in danger of harming the economy, unless tackled by road pricing and expansion of the transport network.

In the year from October 2009 to September 2010 UK airports handled a total of 211.4 million passengers. In that period the three largest airports were London Heathrow Airport (65.6 million passengers), Gatwick Airport (31.5 million passengers) and London Stansted Airport (18.9 million passengers). London Heathrow Airport, located 24 kilometres (15 mi) west of the capital, has the most international passenger traffic of any airport in the world and is the hub for the UK flag carrier British Airways, as well as BMI and Virgin Atlantic. London's six commercial airports form the world's largest city airport system measured by passenger traffic.

2.4.7 Wholesale and retail trade

This sector includes the motor trade, auto repairs, personal and household goods industries. The Blue Book 2006 reports that this sector added gross value of £127,520 million to the UK economy in 2004.

The UK grocery market is dominated by five companies – Asda (owned by Wal-Mart Stores), The Co-operative Food, Morrisons, Sainsbury's and Tesco– which together have a market share of over 80%.

London is a major retail centre and in 2010 had the highest non-food retail sales of any city in the world, with a total spend of around £64.2 billion.The UK-based Tesco is the third-largest retailer in the world measured by revenues (after Wal-Mart Stores and Carrefour) and is the current leader in the UK market with around a 30% share.

3. CURRENCY

London is the world capital for foreign exchange trading. The highest daily volume, counted in trillions of dollars US, is reached when New York enters the trade. The currency of the UK is the pound sterling, represented by the symbol £. The Bank of England is the central bank, responsible for issuing currency. Banks in Scotland and Northern Ireland retain the right to issue their own notes, subject to retaining enough Bank of England notes in reserve to cover the issue. Pound sterling is also used as a reserve currency by other governments and institutions, and is the third-largest after the U.S. dollar and the euro.

The UK chose not to join the euro at the currency's launch. The government of former Prime Minister Tony Blair had pledged to hold a public referendum for deciding membership should "five economic tests" be met. Until relatively recently there was debate over whether or not the UK should abolish its currency Pound Sterling and join the Euro. In 2007 the British Prime Minister, Gordon Brown, pledged at the time to hold a public referendum based on certain tests he set as Chancellor of the Exchequer. When assessing the tests, Gordon Brown concluded that while the decision was close, the United Kingdom should not yet join the Euro. He ruled out membership for the foreseeable future, saying that the decision not to join had been right for Britain and for Europe. In particular, he cited fluctuations in house prices as a barrier to immediate entry. Public opinion polls have shown that a majority of Britons have been opposed to joining the single currency for some considerable time and this position has now hardened further. In 2005, more than half (55%) of the UK were against adopting the currency, while 30% were in favour. The current government, a Conservative and Liberal Democrat coalition, is opposed to membership.

 

4. GOVERNMENT INVOLVEMENT

Government involvement throughout the economy is exercised by the Chancellor of the Exchequer who heads HM Treasury. In recent years, the UK economy has been managed in accordance with principles of market liberalisation and low taxation and regulation. Since 1997, the Bank of England's Monetary Policy Committee, headed by the Governor of the Bank of England, has been responsible for setting interest rates at the level necessary to achieve the overall inflation target for the economy that is set by the Chancellor each year. The Scottish Government, subject to the approval of the Scottish Parliament, has the power to vary the basic rate of income tax payable in Scotland by plus or minus 3 pence in the pound, though this power has not yet been exercised.

In the 20 year period from 1986/87 to 2006/07 government spending in the UK averaged around 40% of GDP. As a result of the 2007–2010 financial crisis and the late-2000s global recession government spending increased to a historically high level of 48% of GDP in 2009–10, partly as a result of the cost of a series of bank bailouts. In July 2007, the UK had government debt at 35.5% of GDP. This figure rose to 56.8% of GDP by July 2009. As of June 2010 there were approximately 6,051,000 public sector employees in the UK (compared to approximately 23,107,000 private sector employees).

4.1 Taxation and borrowing

Taxation in the United Kingdom may involve payments to at least two different levels of government: local government and central government (HM Revenue & Customs). Local government is financed by grants from central government funds, business rates, council tax and increasingly from fees and charges such as those from on-street parking. Central government revenues are mainly income tax, national insurance contributions, value added tax, corporation tax and fuel duty.

These data show the tax burden (personal and corporate) and national debt as a percentage of GDP. Samples are taken at 10 year intervals (snapshots, but the rolling averages are very close).

Year

Tax

Debt

1985/6     44%    43%

1995/6     43%    38%

2005/6*   46%     40%

2009/10 57%     68%

(Source: HM Treasury Public Finances Databank)

(* — Projected)

                   5. POVERTY

The United Kingdom is a developed country with social welfare infrastructure, thus discussions surrounding poverty tend to be of relative poverty rather than absolute poverty. According to the OECD, the UK is in the lower half of developed country rankings for poverty rates, doing better than Italy and the US but less well than France, Austria, Hungary, Slovakia and the Scandinavian countries.

The poverty line in the UK is commonly defined as being 60% of the median household income. In 2007–2008, this was calculated to be £115 per week for single adults with no dependent children; £199 per week for couples with no dependent children; £195 per week for single adults with two dependent children under 14; and £279 per week for couples with two dependent children under 14. 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. This is a decrease of 400,000 children since 1998–1999.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONCLUSION

 

Britain lives by manufacture and trade. For every person employed in

agriculture eleven people are employed in mining, manufacturing and building.

Apart from coal and iron ore Britain has very few natural resources and

mostly depends on imports. Its agriculture provides only half the food in needs.

The other half and most of the raw materials, for it's industries such as oil and

various metals ( copper, zinc, uranium ore and others) have to be imported.

Britain has to import timber cotton, fruit and farm products.

Britain used to be richly forested, but most of the forests were cut down to

make more room for cultivation. Among the crops grown on the farms are

wheat, barley and oats. Britain produces high quality expensive goods, which

has always been characteristic of it's industry. A shortage of raw materials, as

well as the high cost of production makes it unprofitable for British industry to

articles requiring skilled labour, such as precision instruments, electronic

equipment, chemicals. That progress was made in the development of new

industries, such as the aircraft, automobile, electronic industries and others. A

number of atomic power reactors were made. Great emphasis was made on the

development of the war industry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

 

1. http://www.bbc.co.uk
2. http://www.doingbusiness.org
3. http://en.wikipedia.org