UK – Economy Overview

• Capital: London
• Area: 244,820 km²
• Population: 60,587,300
• GDP (PPP): US$2.270 trillion
• GDP (Nominal): US$2.772 trillion
• Currency: Pound Sterling (GBP)
• Time Zone: GMT

The UK economy is made up of the combined economies of England, Scotland, Wales and Northern Ireland. Together it constitutes one of the five major economies in Western Europe that amass over a trillion dollars. Today it is one of the strongest economies in Europe, with low inflation rates, interest rates and unemployment.

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The UK is part of the political entity of the European Union, however, despite efforts on behalf of the Blair government, it had opted to decline membership in the European Economic and Monetary Union (EMU), preferring rather to stick with the pound sterling (£). So far the economy is flourishing outside the EMU, and British opinion polls indicate a sweeping reluctance towards the euro.

The new labor government is currently involved in a vast overhaul of the education system, transport and health services, which may prove to be highly beneficial in the long term, but in the short term is taking a toll on the shape of increasing taxes and a growing public deficit.

Industry

As the originator of the industrial revolution the economy initially relied on heavy industries such as shipbuilding, coal mining, steel production, and textiles and dominated international trade in the 19th century. As other nations industrialized, coupled with the sharp losses the country suffered as result of the two world wars and the deterioration of the British Empire, the UK began to lose its industrial advantage. Ironically, today the role of heavy industry in the world's first industrialized nation continues to decline in importance.

Manufacturing

The British manufacturing sector too has greatly dwindled as an aftermath of World War II. All the same, it is still a substantial part of the economy, with the British motor industry playing a major role in this sector, although most of the industry is foreign owned. Civil and defense aircraft production is robust, with Rolls Royce holding a major share in the global aerospace engines market. The pharmaceutical industry is also one of the country's strongest, with two of the world's largest pharmaceutical firms being based in the UK.

Service

As a counterbalance, the British service sector has grown significantly, and now around 73% of the gross domestic product is comprised of banking, insurance and business services. The UK's capital, London, is the world's largest financial center, housing the London Stock Exchange, the London International Financial Futures and Options Exchange, and the Lloyd's of London insurance market.

Energy

Nevertheless, the UK has an exceptionally high share of primary energy production, mainly due to its large reserves of coal, natural gas, and oil reserves. At 10% of gross domestic product, it is one of the highest shares of any industrial nation in the world.

Agriculture

The UK's agriculture is extremely efficient and mechanized by European standards. Less than 2% of the British labor forces are responsible for producing over 60% of the country's food requirements.

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