Major Factors that have led to its Economic Success and Decline
The United Kingdom economy has experienced major changes in the past few decades, which has shifted the factors of economic growth from physical factors such as machinery and manual labor among others to an economy driven by ideas, skills and knowledge. This can be adopted to provide an explanation of the significant growth of the financial services while the manufacturing sectors have also experienced a significant decline. The UK economy is currently driven significantly by the business services sector, which comprise lawyers, specialists, consultants and estate agents. Therefore, the knowledge based industries comprise the most important group in the UK economy. However, there are other numerous factors that have played an imperative role in enhancing the UK economic growth. For example, the availability of infrastructure and good political environment have also played an imperative role in enhancing the economic growth. The country is the second strongest economy in Europe after Germany and the leading in the financial sector.
At the onset of its economic development, the UK economy was significantly driven by agriculture and availability of natural resources such as oil coal and natural gas. However, these resources have declined significantly, and the country has had to import them. The agricultural sector has become intensive and highly efficient, according to European standards based on high mechanization. Therefore, the UK economy is currently driven by the services industry such as the banking, insurance and other knowledge based sectors. They account for a substantial proportion of the country’s GDP while the industrial sector has experienced a decline. However, the country has also experienced shocks that have stalled and reduced the pace of economic growth, like in the recent 2008 global financial crisis. This led to a sharp decline of prices of homes, increased consumer debt, and the general global economic shock compounded the country’s economic problems. However, the government implemented measures that stimulated and stabilized the economy, which enabled the country to recover.
UK Economic Growth Patterns and Major Trading Industries and Partners
After recovery from the global economic recession, the UK has displayed a strong period of sustained growth, although it has experienced periods of uncertainty and slumps. The terrorist attack of 9/11 exacerbated the uncertainty surrounding the UK economy. However, the growth of business enterprises has enhanced the growth of sustainability of such growth in the country’s growth. As the economy is emerging from the effects of the global recession, the country is focused on shifting the UK to enhance sustainable and durable economic growth. The country is a major trader in the global economy and its economic growth prospects largely depend on the ability of the globe to recover from the financial crisis impacts. This focus is particularly on the countries around the Eurozone, which account for 40% of the country’s total exports. The country has one of the largest structural budget deficit, and it is expected to remain unchanged accounting for 7.8 percent of the GDP in the period 2012-2013 financial year. However, economic prospects indicate that it is expected to reduce based on the wide government economic strategies that encompass other growth measures strategies.
Recent findings have found that the global economy is highly driven by the advanced economies, and the UK is among the leading advanced economies globally. There has been fear among the advanced economies that the emerging economies are slowly taking the world trade. However, according to statistics, the emerging economies were substantially impacted by the global financial crisis and they are yet to recover. However, the advanced economies have remained strong in the global market, enabling them to remain optimistic and maintain a rapid growth rate. Data indicates that import and export activities play a central role in enhancing the growth of the UK’s economy. The country has trading partners all over the globe with countries in the Eurozone topping the list. However, the US is also a major trading partner with numerous corporations establishing operations in their respective trading partner. However, recent data indicate that Germany has risen to become the leading trading partner.
Unemployment in the UK
Unemployment rates in the United Kingdom vary as a result of myriad economic various variables affecting the general economy. Unemployment is termed as individuals who are out of work and actively search for available job opportunities. Over years, the unemployment rates have remained high due to adverse economic conditions. Office for National Statistics states that the highest unemployment rate in the United Kingdom was in 1984, where it hit 11.9 percent. As a result of high unemployment rates experienced in the United Kingdom, the government embarks to mitigate unemployment through the provision of public job opportunities. According to statistics survey compiled by Labor Force Survey every three months, figures show an improvement of employment rates in the recent past. The lowest unemployment rate to hit the United Kingdom, according to the Labor Force Survey, was 3.4 percent in 1973.
In the recent years, unemployment rates have significantly reduced as a result of government measures and strategies employed to curb unemployment in the United Kingdom. According to statistical information from the Office for National Statistics, unemployed individuals hit 2.34 million by an approximate 125, 000 drop in 2013. The unemployment rate among women was stated to have significantly reduced in 2012 as a result of the high number of women working on a full time basis instead of part time. Women unemployment rate was 7.6 percent in 2011 compared to 7.2 percent in 2012. The Male unemployment rate also exhibited positive change after it reduced from 8.8 to 8.2 percent, from 2011 to 2012. On average, the unemployment rate in the United Kingdom was 7.27 percent between the periods 1971 and 2013. Between the 2013 and the beginning of 2014, the number of unemployed people fell by 27, 600 to hit 1.22 million. This has been the lowest unemployment figure since 2008.
UK Major Foreign Investments
The United Kingdom foreign investment is the major source of government revenue in the country. The government and individuals have, mostly, invested in foreign countries that bring in a considerable amount of revenue in the country. Over the recent years, the government has increased its foreign investment in order to improve its economic status thus promotes development. Foreign investment can also be described as investment of other foreign countries within the respective country. The government in concert with other agencies has, heavily, invested in productive assets of foreign countries with an aim of accelerating economic growth. Foreign investment has helped the United Kingdom in sharing of technology with other superpower countries such as the Unite States, and China. The drop in unemployment rates has also been associated with foreign direct investment.
In the recent years, the United Kingdom has been the top recipient of foreign direct investment projects in Europe. There has been an increase in economic development projects in the United Kingdom due to good business environment, and improved infrastructure in the region. The United Kingdom economic recovery process has been accelerated by myriad strategies that have been put to improve the economy. For instance, foreign investment has been boosted by trade missions, affordable taxes, and support small and medium enterprises. Foreign investment has been facilitated by trade activities that the United Kingdom undertakes with other foreign countries. The United Kingdom has also engaged in various trade agreements with private partners that have positively contributed to market research. Foreign direct investment (FDI) in the United Kingdom has played an imperative role in improving the economy.
UK Aids and Loans from other Countries such as IMF and World Bank
Globally, nations find themselves in economic emergencies and conditions that require support in terms of aid and loans from external parties. Equally the UK has also obtained funding from external lenders and aids from global institutions, which enable the country with the rising conditions. Primarily, the UK borrows from both external and internal sources such as global institutions and other private lenders such as banks within the economy. However, being among the major players in the creation and sustainability of the IMF and the World Bank, they also receive aid and loans as the sole purpose of the institutions was to bail off countries facing economic problems. Financing of the government is done from the Bank of England since it is the government custodian.
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OECD. OECD Economic Surveys: United Kingdom 2004. London: OECD Publishing, 2004.