The UK economy is made up (in descending order of size) of the economies of England, Scotland, Wales and Northern Ireland. Based on market exchange rates, the UK is today the sixth largest economy in the world and the third largest in Europe after Germany and France [11] .
The Industrial Revolution began in the UK with an initial concentration of heavy industries such as shipbuilding, coal mining, steel production and the textile industry. The Empire created a huge foreign market for British goods, allowing the United Kingdom to dominate international trade in the 19th century. Later, like other industrialized countries, along with the economic decline after the two world wars, the UK began to lose its competitive edge and heavy industry declined. Although manufacturing remains an important part of the economy, in 2003 it only accounted for one sixth of the country’s income.
According to allcitycodes.com, the automotive industry is an important part of this sector, although it has declined with the collapse of the MG Rover Group and most of the industry is foreign-owned. The production of civil and defense aircraft is led by BAE Systems, the largest defense contractor in the world, and by the European firm EADS, the owner of Airbus. Rolls Royce has a significant share of the global aerospace engine market. The chemical and pharmaceutical industries are important in the UK, as the British companies GlaxoSmithKline and AstraZeneca are the second and sixth largest pharmaceutical companies in the world, respectively.
However, the tertiary sector grew considerably and now produces about 73% of GDP. The service sector is dominated by financial services, especially banks and insurance companies. London is the largest financial center in the world, since here are the headquarters of the London Stock Exchange, the London International Financial Futures and Options Exchange and Lloyd’s of London; in addition to being the leader of the three “command centers” of the world economy (along with New York and Tokyo) [12] . In addition, it has the highest concentration of foreign bank branches in the world. In the last decade, a rival London financial center has grown in the Docklands area, where HSBC, the world’s largest bank, and Barclays relocated their headquarters. Many multinational companies that are not British-owned have chosen London as the site for their European or foreign headquarters: one example is the US financial services firm Citigroup. The capital of Scotland, Edinburgh, is also one of the great financial centers of Europe and is the headquarters of the Royal Bank of Scotland Group, one of the most important banks in the world.
Tourism is very important to the British economy. With the more than 27 million tourists who arrived in the country in 2004, the United Kingdom is ranked as the sixth most important 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 Bangkok (10.4 million visitors) and Paris (9.7 million). Creative industries accounted for 7% GDP in 2005 and grew at an average annual rate of 6% between 1997 and 2005.
The UK has a small reserve of coal, along with significant but continually diminishing reserves of natural gas and oil. More than 400 million tons of coal have been identified and verified in the country. In 2004, total coal consumption (including imports) was 61 million tons, allowing the country to be self-sufficient in coal for just 6.5 years, although with current extraction levels, the period increases to 20 years. An alternative to coal power generation is underground coal gasification (GCS). GCS is a system that injects steam and oxygen into a well, where gas is extracted from the coal and pushes the gas mixture to the surface – a potentially low-carbon carbon extraction method. Following the identification of land areas that have the potential for GCS, gas reserves are estimated to be between 7 billion and 16 billion tons. Based on current coal consumption in the country, these volumes represent reserves that could last between 200 and 400 years.
In July 2007, the UK had a public debt of 35.5% of GDP. This figure increased to 56.8% of GDP in July 2009.
The national currency is the British pound, represented by the symbol £. The Bank of England is the central bank, responsible for issuing the currency. Banks in Scotland and Northern Ireland have the right to issue their own banknotes. The British pound is also used as a reserve currency by other governments and institutions and is the third largest reserve currency, after the US dollar and the euro. The United Kingdom decided not to participate in the launch of the euro as a currency, as the then British Prime Minister, Gordon Brown, had ruled out the adoption of the euro in the near future, arguing that the decision not to join the project had been the best option for the country and for Europe. The government of former Prime Minister Tony Blair promised to hold a public referendum to decide whether the country would carry out the “five economic tests.” In 2005, more than half of the British (55%) were against the adoption of the euro as currency, while only 30% were in favor.
On 23 January 2009, figures from the Office for National Statistics show that the British economy officially fell into recession for the first time since 1991. In the last quarter of 2008, it fell back into a new recession that was accompanied by rising unemployment., which increased from 5.2% in May 2008 to 7.6% in May 2009. The unemployment rate, between 18 and 24 years old, increased from 11.9% to 17.3%.
The poverty line in the UK is commonly defined below 60% of median income. Between 2007 and 2008, 13.5 million people, that is, 22% of the population, lived below this line. It is one of the highest relative poverty levels among the members of the European Union. Although in the same period, 4 million children, 31% of the total, lived in households below the poverty line, after taking into account housing costs. This represents a decrease of 400,000 children compared to the period between 1998 and 1999.
