In the 18th century the UK was the first country in the world to industrialise, and for much of the 19th century possessed a dominant role in the global economy. However, by the late 19th century, the Second Industrial Revolution in the United States and the German Empire presented an increasing challenge to Britain's role as the leader of the global economy. Despite victory, the costs of fighting both the first world war and the second world war further weakened the relative economic position of the UK, and by 1945 Britain had been superseded by the United States as the chief player in the global economy. However, the UK still maintains a significant role in the world economy. The UK is one of the world's most globalised countries. London is the world's largest financial centre alongside New York and has the largest city GDP in Europe. As of December 2010 the UK had the third-largest stock of both inward and outward foreign direct investment (in each case after the United States and France).The aerospace industry of the UK is the second- or third-largest national aerospace industry, depending upon the method of measurement. .The pharmaceutical industry plays an important role in the UK economy and the country has the third-highest share of global pharmaceutical R&D expenditures (after the United States and Japan). The British economy is boosted by North Sea oil and gas reserves, valued at an estimated £250 billion in 2007. The UK is currently ranked fourth in the world (and first in Europe) in the World Bank's Ease of Doing Business Index.
The UK entered a recession in Q2 of 2008, according to the UK Office of National Statistics (ONS) and exited it in Q4 of 2009. The revised ONS figures of November 2009 showed that the UK had suffered six consecutive quarters of negative growth. As of the end of November 2009, the economy had shrunk by 4.9%, making the 2008-2009 recession the longest since records began. In December 2009, the Office of National Statistics revised figures for the third quarter of 2009 showed that the economy shrank by 0.2%, compared to a 0.6% fall the previous quarter.
On 23 January 2009, Government figures from the Office for National Statistics showed that the UK was officially in recession for the first time since 1991. It entered a recession in the final quarter of 2008, accompanied by rising unemployment which increased from 5.2% in May 2008 to 7.6% in May 2009. The unemployment rate among 18 to 24-year-olds has risen from 11.9% to 17.3%. Though initially Britain lagged behind other major economies including Germany, France, Japan, and the US which all returned to growth in the second quarter of 2009, the country eventually returned to growth in the last quarter of 2009. On January 26, 2010, it was confirmed that the U.K. had left its recession, the last major economy in the world to do so In the 3 months to February 2010 the U.K. economy grew yet again by 0.4% In Q2 of 2010 the economy grew by 1.2% the fastest rate of growth in 9 years, in Q3 of 2010 figures released showed the UK economy grew by 0.8%; this was the fastest Q3 growth in 10 years.
In 2008 the education, health and social work sector had a total gross value added of around £170.3 billion, of which around £145 billion was compensation to employees. In 2008 the sector had a total gross capital formation of around £17.7 billion.
In 2008 health and social work had a gross value added of around £93.7 billion. In the UK the majority of the heathcare sector consists of the state funded and operated National Health Service (NHS), which accounts for over 80% of all healthcare spending in the UK and has a workforce of around 1.5 million, making it the largest employer in Europe. The NHS operates independently in each of the four constituent countries of the UK. The NHS in England is by far the largest of the four parts and had a turnover of £92.5 billion in 2008.
In 2008 education had a gross value added of around £76.4 billion. In 2007/08 higher education institutions in the UK had a total income of £23.4 billion and employed a total of 169,995 staff. In 2007/08 there were 2,306,105 higher education students in the UK (1,922,180 in England, 210,180 in Scotland, 125,540 in Wales and 48,200 in Northern Ireland).
[edit] Financial and business services
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.
| GDP growth | 1.7% (2010) 0.5% (2011 Q1) |
|---|---|
| GDP per capita | $32,798 (2009) (nom; 20th) $35,286 (2009) (PPP; 17th) |
| GDP by sector | agriculture: 0.9%; industry: 22.1%; services: 77.1% (2010 est.) |
| Inflation (CPI) | 4.5% (April 2011) |
| Population below poverty line | 14% with household income below 60% of UK median income |
| Gini index | 0.36 (2008) |
| Labour force | 31.45 million (2010 est.) (17th) |
| Labour force by occupation | agriculture: 1.4%; industry: 18.2%; services: 80.4% (2006 est.) |
| Unemployment | 7.6% (June 2011) (unemployment falling at fastest rate since the year of 2000) |
| Average gross salary | 4,108 € / 5,546 $, monthly (2006) |
| Average net salary | 2,749 € / 3,712 $, monthly (2006 |
In October 2007, the International Monetary Fund (IMF) had forecast British GDP to grow by 3.1% in 2007 and 2.3% in 2008. However, GDP growth slowed to a fall of 0.1% in the April–June (second) quarter of 2008 (revised down from zero). In September 2008, the OECD forecast contraction for at least two quarters for the UK economy, possibly severe, placing its predicted performance last in the G7 of leading economies. Six quarters later the UK economy was still contracting, placing a question mark over OECD forecasting methods.
It has been argued that heavy government borrowing over the past cycle has led to a severe structural deficit, reminiscent of previous crises, which will inevitably exacerbate the situation and place the UK economy in an unfavourable position compared to its OECD partners as attempts are made to stimulate recovery, other OECD nations having allowed greater room for manoeuvre thanks to contrasting policies of relatively tighter fiscal control prior to the global downturn.
In May 2009 the European Commission (EC) stated: "The UK economy is now clearly experiencing one of its worst recessions in recent history." The EC expected GDP to decline 3.8pc in 2009 and projected that growth will remain negative for the first three quarters of 2009. It predicted two quarters of "virtual stagnation" in late 2009-early 2010, followed by a gradual return to "slight positive growth by late 2010".
The FTSE 100 and FTSE 250 rose to their highest levels in a year on the 9th of September 2009 with the FTSE 100 breaking through 5,000 and the FTSE 250 breaking through 9,000. On the 8th of September the National Institute of Economic and Social Research believed that the economy had grown by 0.2% in the three months to August, but was proved wrong. In its eyes the UK recession was officially over, although it did warn that "normal economic conditions" had not returned. On the same day, figures also showed UK manufacturing output rising at its fastest rate in 18 months in July. On the 15th of September 2009 the EU incorrectly predicted the UK is expected to grow by 0.2% between July and September, on the same day the governor of the Bank of England, Mervyn King said the UK GDP is now growing. Unemployment has recently fallen in Wales.
Many commentators in the UK were certain that the UK would leave recession officially in Q3, believing that all the signs showed that growth was extremely likely, although in fact government spending had been insufficient to rescue the economy from recession at that point. Figures in fact showed no growth in retail sales in September 2009, and a 2.5% decline in industrial output in August. The revised UK figures confirmed that the economy shrank in Q3 of 2009 by 0.2%, although government spending on cash for the car scrappage scheme helped. Yet this temporary lapse was followed by a solid 0.4% growth in the Q4. UK manufacturers' body, the EEF, appealed for more cash from the government: "Without an extension of support for business investment in the pre-Budget statement next month, it will be difficult to see where the momentum for growth will come from."
Moody's, an American credit rating organisation, gave the UK an AAA credit rating in September 2010, forecasting stable finances largely driven by governmental action. It also reported that the economy is flexible to grow in the future and that household debts and poor exports were large growth-reducing factors, as well as its financial sector.
The UK entered its worst recession since World War II in 2008. However the UK economy grew by 1.2 per cent in Q2 of 2010 and 0.8 per cent in Q3, the fastest consecutive growth in over 10 years, accelerating from the 0.4 per cent growth recorded in Q1 of 2010 and 0.4 per cent growth in Q4 of 2009. However the UK economy shrunk 0.5 per cent in Q4 of 2010 after the UK had its coldest December on record. The U.K. economy has grown 2.8% since the end of the recession; the UK economy has recovered twice as fast as expected
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