ECONOMY
The United Kingdom has the fifth-largest economy in the world, is the second-largest economy in the European Union, and is a major international trading power. A highly developed, diversified, market-based economy with extensive social welfare services provides most residents with a high standard of living. Unemployment and inflation levels are amongst the lowest within the European Union.
The United Kingdom’s economy was hit by turmoil in the financial markets. It entered a recession in the final quarter of 2008, accompanied by rising unemployment which increased from 5.2% in January 2008 to 6.5% in January 2009. In response, the British Government implemented a wide-ranging stability and recovery plan that included a fiscal stimulus package, bank recapitalization, and credit stimulus schemes.
Since 1979, the British Government has privatized most state-owned companies, including British Steel, British Airways, British Telecom, British Coal, British Aerospace, and British Gas, although in some cases the government retains a "golden share" in these companies. The Labour government has continued the privatization policy of its Conservative predecessor, particularly by encouraging "public-private partnerships" (partial privatization) in such areas as the London Underground. The economy of the United Kingdom is now primarily based on private enterprise, accounting for approximately four-fifths of employment and output.
London remains a leading international financial center, but has been affected by recent financial market turbulence. London banks have laid off workers and many have scaled back their international operations. Two U.K. banks, Northern Rock and Bradford & Bingley, have been nationalized while the British Government has taken a significant share in two others. London’s financial exports contribute greatly to the United Kingdom’s gross domestic product, but its contribution is expected to be considerably lessened in the next few years. London is a global leader in emissions trading and is home to the Alternative Investment Market (AIM). It is also a government priority to make London the leading center of Islamic finance.
The United Kingdom is the European Union's only significant energy exporter. It is also one of the world's largest energy consumers, and most analysts predict a shift in U.K. status from net exporter to net importer of energy by 2020, possibly sooner. Oil production in the U.K. is leveling off. While North Sea natural gas production continues to rise, gains may be offset by ever-increasing consumption. North Sea oil and gas exploration activities are shifting to smaller fields and to increments of larger, developed fields, presenting opportunities for smaller, independent energy operators to become active in North Sea production.
GDP (at current market prices, 2008 est.): $1.824 trillion.
Annual growth rate (2008 est.): 0.7%.
Per capita GDP (2008 est.): $31,400.
Natural resources: Coal, oil, natural gas, tin, limestone, iron ore, salt, clay, chalk, gypsum, lead, silica.
Agriculture (1% of GDP): Products--cereals, oilseed, potatoes, vegetables, cattle, sheep, poultry, fish.
Industry: Types--steel, heavy engineering and metal manufacturing, textiles, motor vehicles and aircraft, construction (6% of GDP), electronics, chemicals.
Services (75% of GDP): Types--financial, business, distribution, transport, communication, hotels.
Trade (2008 est.): Exports of goods and services--$458.8 billion: manufactured goods, fuels, chemicals; food, beverages, tobacco. Major markets--U.S., European Union. Imports of goods and services--$630.7 billion: manufactured goods, machinery, fuels, foodstuffs. Major suppliers--U.S., European Union, Japan, and China.
