Economy of the United Kingdom

Economy of the United Kingdom

Currency	Pound sterling (GBP)
Fiscal year	6th April - 5th April
Trade organisations	EU, BCN, OECD and WTO
Statistics
GDP	$2,674 billion(2008 est. nom.)
GDP growth	-0.4% (Q3 2009) and -5.2% (Oct 2008 to Sep 2009)
GDP per capita	$43,785 (2008 est. nom.) (20th)
GDP by sector	agriculture (1%), industry (23%), services (76%) (2008 est.)
Inflation (CPI)	5.7%(September 2009)
Population below poverty line	14% with household income below 60% of UK median income (2006 est.)
Labour force	31 million (includes unemployed) (2007 est.)
Labour force by occupation	Services (81%), industry (18%) and agriculture (1%) (excludes unemployed) (2007)
Unemployment	7.5% (Q3 2009)
Main industries	machine tools, industrial equipment, scientific equipment, shipbuilding, aircraft, motor vehicles and parts, electronic machinery, computers, processed metals, chemical products, coal mining, oil production, paper, food processing, textiles, clothing and other consumer goods.
External
Exports	$442.2 billion (2007 est.)
Main export partners	USA 15%, Germany 11%, France 10%, Ireland 7%, Netherlands 6%, Belgium 6%, Spain 5%, Italy 4% (2007)
Imports	$621.4 billion (2007 est.)
Main import partners	Germany 14.2%, US 8.6%, China 7.3%, Netherlands 7.3%, France 6.9%, Belgium 4.7%, Norway 4.7%, Italy 4.2% (2007)
Public finances
Government debt	$864 billion (2007)
Revenues	$0.97 trillion (2007)
Expenses	$1.04 trillion (2007)
Economic aid	$8 billion (donor)
All values, unless otherwise stated, are in US dollars.

Canary Wharf, London. The tallest buildings in the U.K.

Bishopsgate, in the City of London.

The United Kingdom is a major developed capitalist economy. It is currently the world's sixth largest by nominal GDP and the seventh largest by purchasing power parity. It is the third largest economy in Europe after Germany's and France's in nominal terms, and the third largest after Germany's and Russia's in terms of purchasing power parity. Its GDP PPP per capita is the 18th highest in the world. The United Kingdom is also a member of the G7, G8, G-20 major economies, the Commonwealth of Nations, the Organisation for Economic Co-operation and Development, the World Trade Organisation, and the European Union.

The UK was the first country in the world to industrialise in the 18th and 19th centuries, and for much of the 19th century possessed a predominant role in the global economy. However, by the late 19th century, the Second Industrial Revolution in the United States meant the US had begun to challenge Britain's role as the leader of the global economy. The extensive war efforts of both World Wars in the 20th century and the dismantlement of the British Empire also weakened the UK economy in global terms, and by that time Britain had been superseded by the United States as the chief player in the global economy. At the start of the 21st century however, the UK still maintains an important role in the global economy, due to its large Gross Domestic Product and the financial importance that its capital, London, possesses in the world.

The United Kingdom is one of the world's most globalised countries. The capital, London (see Economy of London), is a major financial centre for international business and commerce and is one of four "command centres" for the global economy (along with New York City, Paris and Tokyo). The British economy is made up (in descending order of size) of the economies of England, Scotland, Wales and Northern Ireland. In 1973, the UK acceded to the European Economic Community which is now known as the European Union after the ratification of the Treaty of Maastricht in 1993.

The UK entered a recession in Q2 of 2008, according to the UK Office of National Statistics (ONS). The revised ONS figures of November 2009 showed that the UK had suffered six consecutive quarters of negative growth.As of the end of November 2009, the economy had shrunk by 5.8%, making the 2008-2009 recession the longest since records began. In October 2009, the Office of National Statistics revised figures for the third quarter of 2009 showed that the economy shrank by 0.3%, compared to a 0.6% fall the previous quarter.. Britain is lagging behind other major economies including Germany, France, Japan, and the US which all returned to growth in the second quarter. Prime Minister Gordon Brown expressed the hope that that the U.K. GDP will grow in Q4. It has been suggested that the U.K. is lagging behind it's European neighbours because the U.K. entered the 2008 recession late. However, German GDP fell 4.7% year on year compared to the UK's 5.1%, and Germany has now posted a second quarterly gain in GDP.

The U.K. is suffering a longer recession than Germany, it has been suggested, as a result of government policy dating back to the policies of the Thatcher government of 1979. U.K. governments have moved away from supporting manufacturing and focused on the financial sector. This was the sector that suffered systemic failure at the time of the collapse of Lehman Brothers. By comparison Germany and other European economies are based on manufacturing, which, it is argued, is more durable and productive.

The OECD predicts that the U.K. will grow 1.6% in 2010, doubling its forcasts of growth of a few months ago. Inner London is the richest area in Europe with a GDP per capita of nearly $80,000. Edinburgh in Scotland is also one of the largest financial centres in Europe. {{citation}}: Empty citation (help)

Overview

Following the end of World War II, there was a long interval without a major recession (1945 - 1973) and a growth in prosperity in the 1950s and 1960s. According to the OECD, the annual rate of growth (percentage change) between 1960 and 1973 averaged 2.9%.

However, following the severe shock of the 1973 oil crisis and the 1973–1974 stock market crash, the British economy went into recession in 1974, with GDP falling by 1.1%, recording weaker growth than other European nations in the 1970s overall.

A new period of neo-liberal economics began with the advent of the government of Margaret Thatcher of 1979. Most state-owned enterprises in the industrial and service sectors, which since the 1940s had been nationalised, were privatised. As a result, the British Government owned very few industries or businesses. GDP fell 5.9% at first then rose to 5% at its peak in 1988, according to the IMF, as banks and other financial institutions in the UK enjoyed the liberalisation of the regulatory structures and greater freedom to explore new investment vehicles with less oversight.

After a mild recession in the early 1990s, there followed (according to the UK Prime Minister Gordon Brown) the longest period of sustained economic growth Britain had seen for more than 150 years, achieving growth in every quarter between 1992 and 2007, one of the highest economic growth rates of major developed economies during that time. GDP growth briefly reached 4% in the early 1990s, gently declining thereafter. Peak growth was relatively anaemic compared to past rates of growth, such as the 6.5% peak in the early 1970s, although over-all growth was more sustained than earlier. Annual growth rates averaged 2.68% between 1992-2007 according to the IMF, with the finance sector growth contributing a greater part than previously.

This boom ended in 2008 when the United Kingdom entered a recession brought about by the global financial crisis. Beginning with the collapse of Northern Rock, which was taken into public ownership in February 2008, major banks failed and were nationalised. The Royal Bank of Scotland Group, which at its peak was the second largest bank in the UK and the fifth largest in the world by market capitalisation, was effectively nationalised on 13 October 2008, when the British Government announced it would take a stake of up to 58% in the Group. By mid 2009, the HM Treasury had a 70.33% controlling shareholding in RBS, and a 43% shareholding through UK Financial Investments Limited of Lloyds Banking Group, formerly the fifth largest banking group in the UK.

The UK economy had been one of the strongest EU economies in terms of inflation, interest rates and unemployment, all of which remained relatively low until the 2008-09 recession, when unemployment rose dramatically, and interest rates fell to 0.5%. In 2007, according to the International Monetary Fund, the United Kingdom had the ninth highest level of GDP per capita in the European Union in terms of purchasing power parity, after Luxembourg, Ireland, the Netherlands, Austria, Denmark, Sweden, Belgium and Finland. However, in common with the economies of other English-speaking countries, it has higher levels of income inequality than many European countries. During August 2008 the IMF warned that the UK economic outlook had worsened due to a twin shock: financial turmoil as well as rising commodity prices. Both developments harm the UK more than most developed countries, as the UK obtains revenue from exporting financial services while recording deficits in finished goods and commodities, including food.

In 2007, the UK had the world's third largest current account deficit, despite significant oil revenues, according to the IMF. This was mainly the result of a large deficit in the trade in manufactured goods. During May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance. Although the UK's "labour productivity per person employed" has been progressing well over the last two decades and has overtaken productivity in the united Germany, it lags around 20% behind France's level, where workers have a 35-hour working week. The UK's "labour productivity per hour worked" is currently on a par with the average for the "old" EU (15 countries). The United Kingdom currently ranks 21st on the Human Development Index.

Recent economic performance

Infirmary Street in Leeds is one of the main business districts outside of London.

Gross Domestic Product (GDP) decreased by a revised figure of 0.3 per cent in the third quarter of 2009, after a decrease of 0.6 per cent in the second quarter, according to the Office for National Statistics (ONS). There was a 2.4% decline in the first quarter of 2009. The economy has now contracted 5.9% from its peak before the recession began, the BBC reports.

In October 2007, the IMF had forecast British GDP to grow by 3.1% in 2007 and 2.3% in 2008. However, GDP growth slowed to a fall of 0.1% in the April-June (second) quarter of 2008 (revised down from zero). In September 2008, the OECD forecast contraction for at least two quarters for the UK economy, possibly severe, placing its predicted performance last in the G7 of leading economies . Six quarters later the UK economy was still contracting, placing a question mark over OECD forecasting methods.

It has been argued that heavy government borrowing over the past cycle has led to a severe structural deficit, reminiscent of previous crises, which will inevitably exacerbate the situation and place the UK economy in an unfavourable position compared to its OECD partners as attempts are made to stimulate recovery, other OECD nations having allowed greater room for manoeuvre thanks to contrasting policies of relatively tighter fiscal control prior to the global downturn.

In May 2009 the European Commission (EC) stated: "The UK economy is now clearly experiencing one of its worst recessions in recent history." The EC expected GDP to decline 3.8pc in 2009 and projected that growth will remain negative for the first three quarters of 2009. It predicted two quarters of "virtual stagnation" in late 2009-early 2010, followed by a gradual return to "slight positive growth by late 2010".

The FTSE 100 and FTSE 250 rose to their highest levels in a year on the 9th of September 2009 with the FTSE 100 breaking through 5,000 and the FTSE 250 breaking through 9,000. On the 8th of September the National Institute of Economic and Social Research believed that the economy had grown by 0.2% in the three months to August, but was proved wrong. In its eyes the UK recession was officially over, although it did warn that "normal economic conditions" had not returned. On the same day, figures also showed UK manufacturing output rising at its fastest rate in 18 months in July.. On the 15th of September 2009 the EU incorrectly predicted the UK is expected to grow by 0.2% between July and September, on the same day the governor of the Bank of England, Mervyn King said the UK GDP is now growing.. Unemployment has recently fallen in Wales.. Many commentators in the UK were certain that the UK would leave recession officially in Q3, believing that all the signs showed that growth was extremely likely, although in fact government spending had been insufficient to rescue the economy from recession at that point. Figures in fact showed no growth in retail sales in September 2009, and a 2.5% decline in industrial output in August. The revised U.K. figures confirmed that economy shrunk in Q3 of 2009 by 0.3%, although government spending on cash for the car scrappage scheme helped. UK manufacturers' body, the EEF, appealed for more cash from the government: "Without an extension of support for business investment in the pre-Budget statement next month, it will be difficult to see where the momentum for growth will come from."

Macroeconomic trend

This is a chart of trend of gross domestic product of United Kingdom at market prices estimated by the International Monetary Fund with figures in millions of pounds sterling.

Year	Gross domestic product	US dollar exchange	Inflation index (2000=100)	Per Capita Income (as % of USA)
1925	4,466	£0.21		61.79
1930	4,572	£0.21		66.08
1935	4,676	£0.20		85.67
1940	7,117	£0.26		74.28
1945	9,816	£0.25		50.93
1950	13,162	£0.36		38.26
1955	19,264	£0.36		42.54
1960	25,678	£0.36		47.86
1965	35,781	£0.36		49.96
1970	51,515	£0.42		44.04
1975	105,773	£0.45		55.54
1980	230,695	£0.42	43	78.57
1985	354,952	£0.77	60	46.84
1990	557,300	£0.56	76	76.62
1995	718,383	£0.63	92	71.84
2000	953,576	£0.65	100	72.29
2005	1,209,334	£0.54	107	90.17

For purchasing power parity comparisons, the US Dollar is exchanged at £0.66.

Industries

Agriculture, hunting, forestry, and fishing

Agriculture is intensive, highly mechanised, and efficient by European standards, producing about 60% of food needs with less than 2% of the labour force (477,000 out of a total workforce of 31,598,000, 3rd quarter of 2007) . It contributes around 2% of GDP. Around two-thirds of the production is devoted to livestock, one-third to arable crops. The main crops that are grown are wheat, barley, oats, oilseed rape, maize for animal feeds, potatoes and sugar beet. New crops are also emerging, such as linseed for oil and hemp for fibre production. The main livestock which are raised are cattle, chickens (the UK is the second largest poultry producer in Europe after France) and sheep. Agriculture is subsidised by the European Union's Common Agricultural Policy.

The UK retains a significant, although vastly reduced, fishing industry. Its fleets, based in towns such as Kingston upon Hull, Grimsby, Fleetwood, Great Yarmouth, Peterhead, Fraserburgh, and Lowestoft, bring home fish ranging from sole to herring.

The Blue Book 2006 (page 110) reports that the "Agriculture hunting, forestry and fishing" added gross value of £10,323 million (at 2006 prices) to the UK economy in 2004.

Production

UK exports of goods in 2005

Mining and quarrying

The Blue Book 2006 reports that this sector added gross value of £21,876 million to the UK economy in 2004.

Manufacturing

In 2003, manufacturing industry accounted for 16% of national output in the UK and for 13% of employment, according to the Office for National Statistics. This is a continuation of the steady decline in the importance of this sector to the British economy since the 1960s, although the sector is still important for overseas trade, accounting for 83% of exports in 2003. The regions with the highest proportion of employees in manufacturing were the East Midlands and West Midlands (at 19 and 18% respectively). London had the lowest at 6%.

Although the manufacturing sector's share of both employment and the UK's GDP has steadily fallen since the 1960s, data from the OECD shows that manufacturing output in terms of both production and value has steadily increased since 1945. This is a trend common in many mature Western economies. Heavy industry, employing many thousands of people and producing large volumes of low-value goods (such as steelmaking) has either become highly efficient (producing the same amount of output from fewer manufacturing sites employing fewer people- for example, productivity in the UK's steel industry increased by a factor of 8 between 1978 and 2006 ) or has been replaced by smaller industrial units producing high-value goods (such as the aerospace and electronics industries).

Engineering and allied industries comprise the single largest sector, contributing 30.8% of total Gross Value Added in manufacturing in 2003. Within this sector, transport equipment was the largest contributor, with 8 global car manufacturers being present in the UK – BMW (MINI, Rolls-Royce), Tata (Jaguar-Land Rover), General Motors (Vauxhall Motors), Honda, Nissan, Toyota and Volkswagen (Bentley) with a number of smaller, specialist manufacturers (including Lotus and Morgan) and commercial vehicle manufacturers (including Leyland Trucks, LDV, Alexander Dennis, JCB, the main global manufacturing plant for the Ford Transit, Manganese Bronze and Case-New Holland) also being present. The British motor industry also comprises numerous components for the sector, such as Ford's diesel engine plant in Dagenham, which produces half of Ford's diesel engines globally.

A Rolls-Royce Trent 900 engine on the wing of an Airbus A380.

A range of companies like Brush Traction and Hunslet manufacture railway locomotives and other related components. Associated with this sector are the aerospace and defence equipment industries. The UK manufactures a broad range of equipment, with the sector being dominated by BAE Systems, which manufactures civil and defence aerospace, land and marine equipment; VT Group, one of the world's largest builders of warships; and GKN and Rolls Royce, who manufacture aerospace engines and power generation systems. Commercial shipbuilders include Harland and Wolff, Cammell Laird, Abels, Barclay Curle and Appledore. Companies such as Fairline Boats and Sunseeker are major builders of private motor yachts.

Another important component of Engineering and allied industries is electronics, audio and optical equipment, with the UK having a broad base of domestic firms, alongside a number of foreign firms manufacturing a wide range of TV, radio and communications products, scientific and optical instruments, electrical machinery and office machinery and computers.

Chemicals and chemical-based products are another important contributor to the UK's manufacturing base. Within this sector, the pharmaceutical industry is particularly successful, with the world's second and third largest pharmaceutical firms (GlaxoSmithKline and AstraZeneca respectively) being based in the UK and having major research and development and manufacturing facilities there.

The headquarters of GlaxoSmithKline in Brentford

Other important sectors of the manufacturing industry include food, drink, tobacco, paper, printing, publishing and textiles. The UK is also home to three of the world's biggest brewing companies: Diageo, SABMiller and Scottish and Newcastle, other major manufacturing companies such as Unilever, Cadbury, Tate & Lyle, British American Tobacco, Imperial Tobacco, EMAP, HarperCollins, Reed Elsevier, Ben Sherman, Burberry, French Connection, Reebok, Pentland Group and Umbro being amongst the largest present.

The Blue Book 2006 reports that this sector added gross value of £147,469 million to the UK economy in 2004.

Manufacturing is an important sector of the modern British economy and there is a considerable amount of published research on the subject of the factors affecting its growth and performance. Of late, such things as increases in taxation and regulation have tended to diminish the favourableness of the political-legal environment for UK industry. Within manufacturing, British firms and industries have often lagged behind their overseas competitors in terms of productivity and various other key performance measures. However, Britain – the birthplace of the Industrial Revolution – continues to be one of the most attractive countries in the world for direct foreign industrial investment.[1]

Electricity, gas and water supply

The Blue Book 2006 reports that this sector added gross value of £17,103 million to the UK economy in 2004. The United Kingdom is expected to launch the building of new nuclear reactors to replace existing generators and to boost UK's energy reserves.

Construction

The Blue Book 2006 reports that this industry added gross value of £64,747 million to the UK economy in 2004.

Service industries

UK exports of services in 2005

The service sector is the dominant sector of the UK economy, a feature normally associated with the economy of a developed country. This means that the Tertiary sector jobs outnumber the Secondary and Primary sector jobs.

Wholesale and retail trade

This sector includes the motor trade, auto repairs, personal and household goods industries. The Blue Book 2006 reports that this sector added gross value of £127,520 million to the UK economy in 2004.

Hotels and restaurants

The Blue Book 2006 reports that this industry added gross value of £33,074 million to the UK economy in 2004.

Transport, storage and communication

The Blue Book 2006 reports that the transport and storage industry added gross value of £49,516 million to the UK economy in 2004 while the communication industry added a gross value of £29,762 million.

Financial intermediation

The City of London is the world's largest financial centre.

London is the world's largest financial centre, with financial services based around two districts: 'The City' (the City of London) and the Docklands (particularly around Canary Wharf). The City houses the London Stock Exchange (shares and bonds), London Metal Exchange (base metal and plastic futures), Lloyds of London (insurance), and the Bank of England. The Docklands began development in the 1980s and is now home to the Financial Services Authority, as well as several important financial institutions (such as Barclays Bank, Citigroup and HSBC). There are now over 500 banks with offices in the City and Docklands, with the majority of business in London being conducted on an international basis, with established leads in areas such as Eurobonds, foreign exchange markets, energy futures and global insurance. The Alternative Investments Market has acted a growth market over the past decade, allowing London to also expand as an international equity centre for smaller firms.

The United Kingdom had £21bn of financial exports in 2005, contributing significantly towards the balance of payments. The UK has had an expanding export business in financial service, at least partly due to the presence of a regulatory structure now accepted by the Government as inadequate [2], as well as a highly skilled workforce.

Several other major UK cities have large financial sectors and related services, such as Leeds, Glasgow, Manchester and Edinburgh, which is the eleventh largest banking centre in Europe and home to the Royal Bank of Scotland (the third largest bank in Europe), HBOS (owners of the Bank of Scotland), and Standard Life Insurance.

The Blue Book 2006 reports that this industry added gross value of £86,145 million to the UK economy before adjustment of financial services valued at £50,165 million in 2004.

Real estate and lettings

The UK property market boomed for the seven years up to 2008 and in some areas property trebled in value over that period. The increase in property prices had a number of causes: sustained economic growth (which grew for several years because of the increase in credit!), an expansion in household numbers, low interest rates,(achievable through low domestic demand by outsourcing of cheap labour to the far east), the growth in property investment (as a result of credit expansion to cover lack of domestic demand), and planning restrictions on the supply of new housing. The price rises from 1995-2007 in the UK were almost entirely attributable to the vast increase in demand caused by easy credit in response to trade imbalances and cheap consumer goods from the far east. This easy credit caused the largest depression (so far) since the great depression.

The UK property market initially peaked in July 2004 and was static or falling in the capital and some other areas until late 2005, leading many to worry about the possibility of a house price crash and to predict the end of a major British property bubble. However, the property market strengthened considerably in the first half of 2006, showing particular strength in the capital. This led many analysts to revise previously negative assessments of the market, with most subsequently predicting continued modest growth in prices in the mid-term. [3] However, around September 2007, house prices began to fall consistently, arguably contributing to the negative UK economic growth of the 3rd Quarter 2008 [4].

The predicted house price crash began in late 2008, and is all the more damaging because of record levels of household debt. Increasing numbers of bankruptcies and home repossessions have worried some economists. This has led many to propose that the correction in house prices will lead much of the country into a lengthy recession. In contrast however, first-time buyers who currently have assets not consisting of residential property, but with no way of attaining residential property (in some cases at all, and in others without undertaking unsustainable debt amounting to on average up to 5 times their annual salary), are now better placed to enter the property market.

The rapid increase in buy-to-let speculators since 2000 created an artificial shortage of homes. The effect was to price many first-time buyers out of the market; they have declined from around 50% of sales to 25%, virtually equal to the expansion in buy-to-let. A survey in London in 2006 found that 67% of new properties were sold to buy-to-let speculators. This and planning restrictions requiring builders to use brown field sites led to rapid growth in one and two-bedroom apartments in cities such as Manchester, Leeds and Nottingham, creating an oversupply of this type of property. Banks relaxed their lending requirements for buy-to-let buyers from 75% of the value the of property in 2003 to 85%, effectively creating a highly geared investment that relied on rising prices. The perception of a housing shortage, despite there being little evidence of any shortage of property to rent (if not buy), meant that most UK buyers believed that property prices would always rise except for small and temporary falls.

This sector includes letting of dwellings and other related business support activities. The Blue Book 2006 reports that the lettings industry added gross value of £83,037 million to the UK economy in 2004 while other real estate and business support activities added gross value of £175,333 million.

The paucity of finance available to homebuyers by the self-regulation of the banks following the collapse of the financial system in 2007 continues to contribute to a very much diminished demand for housing in the UK with sales volumes around half of the pre-crash level. With many sellers reluctant to drop their price, there is a chronic over-supply of housing on the market at prices in excess of demand (as of September 2009), leading to the average time on the market for residential property to be over 12 months (well above the long term trend). This situation has arisen partly because of the deferred repayment windows created by the government forcing the courts to delay possession orders. As the regulatory framework of the banks is in concordance with Basel II, then the demand for UK residential property is likely to remain very subdued in comparison to pre credit-crunch lending for many years to come. As the forced sellers in the market increase when the repayment deferrals cease, in combination with other forced sellers (death and divorce), many economists predict that the worst of the crash in UK residential property is yet to be realised. This is in keeping with other major economies that experienced rapid house price growth over the last decade; They have seen larger scale falls in prices that have yet to materialise in the UK, as of September 2009.

Public administration and defence

The Blue Book 2006 reports that this sector added gross value of £55,280 million to the UK economy in 2004.

Education

The Blue Book 2006 reports that this sector added gross value of £61,786 million to the UK economy in 2004.

Health and social work

The Blue Book 2006 reports that this sector added gross value of £75,817 million to the UK economy in 2004.

Other social and personal services

This sector includes value added by private households with employees and extraterritorial organisations. The Blue Book 2006 reports that this sector added gross value of £55,543 million to the UK economy in 2004.

Currency

The Bank of England; the central bank of the United Kingdom.

Until relatively recently there was debate over whether or not the UK should abolish its currency Pound Sterling and join the Euro. The British Prime Minister, Gordon Brown, pledged at the time to hold a public referendum based on certain tests he set as Chancellor of the Exchequer.

When assessing the tests, Gordon Brown concluded that while the decision was close, the United Kingdom should not yet join the Euro. In particular, he cited fluctuations in house prices as a barrier to immediate entry. Public opinion polls have shown that a majority of Britons have been opposed to joining the single currency for some considerable time and this position has now hardened further. The main opposition party, the Conservative party, are opposed to membership.

Exchange rates

The London Stock Exchange

(average for of each year), in USD (US Dollar) and EUR (euro) per GBP; and inversely: GBP per USD and EUR. (Synthetic Euro XEU before 1999). Caution: these averages conceal wide intra-year spreads. The coefficient of variation gives an indication of this. It also shows the extent to which the pound tracks the euro or the dollar. Note the effect of Black Wednesday in late 1992 by comparing the averages for 1992 with the averages for 1993.

Year	£/USD	USD/£	C.Var		£/XEU	XEU/£	C.Var
1990	£0.5633	$1.775			£0.7161	1.397
1991	£0.5675	$1.762			£0.7022	1.424
1992	£0.5699	$1.755			£0.7365	1.358
1993	£0.6663	$1.501			£0.7795	1.283
1994	£0.6536	$1.530			£0.7742	1.292
1995	£0.6338	$1.578			£0.8200	1.220
1996	£0.6411	$1.560			£0.8029	1.245
1997	£0.6106	$1.638			£0.6909	1.447
1998	£0.6037	$1.656			£0.6779	1.475

Year	£/USD	USD/£	C.Var		£/EUR	EUR/£	C.Var
1999	£0.6185	$1.617			£0.6595	€1.516
2000	£0.6609	$1.513			£0.6099	€1.640
2001	£0.6943	$1.440			£0.6223	€1.607
2002	£0.6664	$1.501			£0.6289	€1.590
2003	£0.6123	$1.633			£0.6924	€1.444
2004	£0.5461	$1.832	2.26%		£0.6787	€1.474	1.92%
2005	£0.5500	$1.820	3.47%		£0.6842	€1.462	1.27%
2006	£0.5435	$1.842	3.79%		£0.6821	€1.466	1.11%
2007	£0.4999	$2.001	1.97%		£0.6848	€1.461	2.40%
2008	£0.5499	$1.835	tbc		£0.7964	€1.226	tbc

1 GBP in USD since 1971

Source: OANDA.COM Historical Currency Converter

For consistency and comparison purposes, coefficient of variation is measured on both the "per pound" ratios, although it is conventional to show the forex rates as dollars per pound and pounds per euro.

National & Regional variation

A map of England divided by the average GVA per capita in 2005 showing the distribution of wealth

The strength of the UK economy varies from region to region. GVA, and GVA per capita is highest in London. The following table shows the GVA (2006) per capita of the 12 NUTS:2 areas, with data supplied by the Office for National Statistics .

Rank	Place	GVA per capita in pounds
1	Greater London, England	26 192
2	South East England	21 514
3	East of England	19 599
4	Scotland	17 789
5	South West England	17 467
6	East Midlands, England	16 982
7	West Midlands, England	16 583
8	North West England	16 234
9	Yorkshire and the Humber, England	15 968
10	North East England	15 177
11	Northern Ireland	15 175
12	Wales	14 396

Two of the richest 10 areas in the European Union are in the United Kingdom. Inner London is number 1 with a GDP per capita of €65 138, and Berkshire, Buckinghamshire and Oxfordshire is number 7 with a GDP per capita of €37 379.

Taxation and borrowing

Main article: Taxation in the United Kingdom

Taxation in the United Kingdom may involve payments to at least two different levels of government: local government and central government (HM Revenue & Customs). Local government is financed by grants from central government funds, business rates, council tax and increasingly from fees and charges such as those from on-street parking. Central government revenues are mainly income tax, national insurance contributions, value added tax, corporation tax and fuel duty.

These data show the tax burden (personal and corporate) and national debt as a percentage of GDP. Samples are taken at 10 year intervals (snapshots, but the rolling averages are very close).

Year	Tax	Debt
1975/6	54%	43%
1985/6	44%	43%
1995/6	43%	38%
2005/6*	46%	40%

(Source: HM Treasury Public Finances Databank)

(* — Projected)

The money Gross Domestic Product (GDP) for the United Kingdom, at market prices, in 2005 was £1,211 billion (or $2,431 billion) according to HM Treasury in March 2006.

GDP % GDP for selected years, 2002 — 2006 est.

Year	GDP in billions of USD PPP	1.9% (2005 est.) GDP Growth
2002	1575.906	2.0
2003	1640.829	2.5
2004	1736.377	3.2
2005	1825.837	1.9
2006	1910.818	2.2

Income distribution  lowest 10%  highest 10%	(1999) 2.1% 28.5%
Consumer prices inflation	RPI: 3% (2004), CPI: 1.6% (2004)
Labour force composition  services  government  manufacturing/construction  energy  agriculture	(2004) 46% 28% 24% 1% 1%
Industrial growth	-0.3% (1999)
Electricity production	382.7 TWh (2004)
exports	0.77%
Electricity production composition  fossil fuel  hydro  nuclear  renewables  imports	(2004) 74.13% 1.1% 19.26% 3.55% 1.96%
Electricity consumption	337.4 TWh (2003)
Electricity exports	2.959 TWh (2003)
Electricity imports	5.119 TWh (2003)
Agriculture products	cereals, oilseed, potatoes, vegetables; cattle, sheep, poultry; fish
Exported commodities	manufactured goods, fuels, chemicals; food, beverages (notably Scotch whisky), tobacco
Imported commodities	manufactured goods, machinery, fuels; foodstuffs

Exports

In 2007 UK exports were valued at £220bn.

• Food and drink exports were valued at £9.7bn (2005)
• UK total arms exports were valued at £7.1bn (2005)

UK export figures are boosted 10% by high levels of Missing trader fraud according to the Office for National Statistics.

Poverty

Main article: Poverty in the United Kingdom

The United Kingdom is a developed country with social welfare infrastructure, thus discussions surrounding poverty tend to be of relative poverty rather than absolute poverty.

In 2002 the percentage of population below the 'Poverty Line' (Household income below 60 per cent of median income) stood at 17%. This has fallen steadily over recent years to a low of 14% in 2006, the last year for which figures are available.

See also

• United Kingdom budget
• Economic history of the United Kingdom
• Residential property market in the United Kingdom

External links

• UK National Statistics, "Publication Hub: Gateway to National Statistics" (Accessed November 2009).

• Demands for nationalization of banks from sections of big business WSWS
• CIA World Factbook
• OECD's United Kingdom country Web site and OECD Economic Survey of the United Kingdom
• Is the US a Good Model for Reducing Social Exclusion in Europe? August 2006
• UK Bank Rate since 1970
• HM Revenue & Customs trade statistics UK Imports & Exports