British Economy: Between Tradition and Innovation in the 21st Century

Modern British Economy

Britain is a modern and developed country that has a mixed economy and the private sector is the most important.
The public sector changes over the past two decades because the government has reduced public ownership and contained the growth of social welfare programmes.

The British economy is one of the strongest in Europe thanks to the high GDP*, low levels of inflation, unemployment and interest rates. This is one of the reason because of British people are against the project for Britain to join in the EMU (economic and monetary union).

However the British economy has also negative aspect like inequality, high poverty rate and, compared to the rest of Europe, weak social and public services.

In addition around 10% of the GDP comes from energy resources.

*GDP (Gross domestic product) = the total value of all the products and services a country produces.

What is the Importance of Trade in the UK?

In the British economy, trade is very important, in fact UK is the fifth largest trading nation in the world, the second largest exporter of services and the sixth of goods.

Exports like manufactured and semi-manufactured goods (heavy machinery, transport, equipment, aerospace, chemicals and electronics) are equivalent to about 19% of the GDP.
About 77% of the British countryside is farmland. There is a particular high concentration in east of England and Scotland. A quarter of the farmland is used for growing crops while the rest is used for grazing sheep and cattle.

Farming is now intensive and highly mechanized so Britain produces about 64% of food needs with the lowest labour force (many of workers are seasonal workers or migrants) of any EU country.

The agricultural contribution to the GDP is about 1%.

We have to say that in recent years the UK’s farming community faced many problems like the mad cow disease as BSE epidemic, the outbreak of foot, severe flooding and GM crops.

Dairy farming is concentrated in western half of Britain, that provides milk for the 400 different types of cheese of which the most famous are Cheddar and Stilton, also known as “king of cheese”.

Fishing and Energy Resources

In the UK fishing is very important because it provides about 70% of domestic need and is source of employment and income. The major products are salmons, trouts and shellfishes. Even so, the UK fishing industry is in decline because there is an overexploitation of fisheries in the North Sea. For this reason, EU has applied some measures to stop the decline like limiting the number of days a month that fisherman can spend at sea.

Energy Resources in Britain accounts for the 10% of the GDP, one of the highest shares of any industrial nation.

The main resources are oil and gas, which accounts for about 75% of total UK energy consumption.

Oil was discovered in the North Sea in 1969 and become quickly very important for the British economy. Its production picked in 1990s and then starts to decline.

Gas, instead, has been used in UK since 19th century, but it was manufactured from coal.

Since the 1960s, when offshore gas fields were discovered, natural gas has been used and now accounts for about 40% of the fuel consumption in Britain.

Coal was the main source of fuel during the Industrial Revolution and for over 300 years, especially in Yorkshire, South Wales and Scotland but now it’s less important in the British Economy.

As regards nuclear power, Britain was a pioneer in the development of this technology since 1956, that by 2006 provided one third of the electricity produced. There was a problem about radioactive waste when some of the nuclear stations were privatized and stop being productive. It was one of the most serious problem of pollution for years.

Britain is an island therefore it’s suitable for producing alternative energy from wave and wind, in fact wind farms should be able to supply nearly 5% of the national electricity requirements in few years.

Industrial Decline and Innovation

Over the last 50 years industry has declined in importance in the UK because of the employment falling. This has contributed to the striking differences in social and economic composition between the north and the south.

Even so, Britain remain an important manufacturing country. In recent years the production has expanded into communications equipment, including fiber optics, computers, machine tolls and robots. Growing industries include paper products, pharmaceuticals, rubber and plastics. The main industries in UK are: industrial and scientific equipment, machine tools, shipbuilding, aircrafts, chemical and electronic products, computers, food processing, clothes,...

Scotland is the major producer of computers, the Silicon Glen between Glasgow and Edinburgh is the site of many overseas computer firms.

Services and Financial Centers

In the UK services accounts for the largest proportion of the GDP and include finance, retailing, wholesaling, tourism, business services, transport, education, market research, administration, government and professional services.

London is the most important financial center in Europe and handles the 20% of the world’s insurance business. Banking and financial services have always played an important part in London’s economy, in fact the City of London has the largest concentration of international banks and currency trading. Other important cities that developed as financial centers in recent decades are Manchester, Glasgow, Edinburgh, Cardiff and Liverpool.