The main features of the economy of the United Kingdom of Great Britain and Northern Ireland are: integration into the world economic system; moderate rates of economic growth, corresponding to the classical market economy.
Great Britain was the leader of the industrial revolution of the XIX century However, at the beginning of the XX century. a number of historical factors led to the loss of leading positions. Currently, the country, which once accounted for half of the world’s industrial production, retains no more than 3%.
With the conservatives coming to power in 1979, foreign exchange controls were eliminated, financial markets were deregulated, many industries were privatized, and direct taxation of high incomes was reduced. The government began to provide serious support to modern knowledge-intensive industries and stimulate the expansion of foreign capital into the economy. Enterprises owned by foreign companies produce 25% of industrial output.
British products are characterized by high science intensity. Great Britain is one of the countries leading in the world NTP, it has the greatest scientific and technical potential in Europe. Confirmation can serve as the fact that the UK is the second, after the United States, state in terms of the number of Nobel prizes received by its scientists (over 70). The most important discoveries of the British are:
– the structure of DNA;
– superconductivity;
– computed tomography;
– ozone hole;
– radioastrophysics;
– cloning (Jan Wilmut from Edinburgh raised Dolly the sheep, genetically identical to the donor).
The basis of the British economy is the private sector, which produces 80% of GDP and provides 75% of employment.
At the end of the XX century. the following structure of the British economy was formed:
– “primary sector”, including agriculture, forestry and fisheries – 1.8% of GDP and 1.1% of the total labor force;
– “secondary sector” – manufacturing and construction – 31.4% of GDP, 18.7 employed;
– “tertiary sector” – the service sector – 66.8% of GDP and 80.2% of the employed.
Industry. Over the past two decades, there have been major changes in the sectoral structure of industry: the share of mechanical engineering has increased; the role of the chemical industry has increased; energy is developing rapidly; oil and gas industry. In the same period, there was a stable development of the food industry. However, the role and share of coal and light industry has decreased. The modern development of the country’s industry is determined by high technologies, which is why the products manufactured in the UK are distinguished by their high knowledge intensity. The UK’s R&D spending is 2% of GDP.
The coal industry is one of the oldest sectors of the UK economy.
Coal mining for centuries fully provided the British economy with fuel. Currently, the industry is experiencing a crisis, as coal has been replaced by oil and gas.
The country’s largest coal basins are Yorkshire, Durham and Northwest. However, the share of coal in the fuel and energy balance is constantly decreasing, from 1970 to 1977 from 140 to 119 million tons. Currently, coal production is less than 49 million tons. The United Kingdom used to be a major exporter of coal. At the beginning of the twentieth century, up to 110 million tons per year were exported, now only 7-9 million tons.
Oil and gas industry. The UK ranks second in Western Europe after Norway in oil production. In 2000, production amounted to about 140 million tons. Oil imports (40-50 million tons) remain. This is due, among other things, to the predominance of light fractions in North Sea oil and the need to obtain the entire range of petroleum products at oil refineries (refineries). In addition, the persistence of oil imports from the Middle East region is a residual phenomenon of those times when the British refining industry was focused on the supply of cheap raw materials from the Persian Gulf region with appropriately equipped refineries.
Oil refining is represented by sixteen refineries with a total capacity of 96 million tons per year. The largest oil refineries are located near deep-water seaports: at Southampton – in Foley, in Liverpool, at the mouths of the Thames, Trent and Tees rivers. A large factory was also built in Scotland on the coast of the Firth of Forth. Oil pipelines have been built from oil fields in the North Sea to refineries at the mouth of the Tees River and in the Firth of Forth.
Gas produced from the bottom of the North Sea through gas pipelines laid at the bottom reaches the east coast of the country, and then through the London-Lancashire main line and its branches enters all regions of the country. In 2000, gas production amounted to 90 billion cubic meters, of which
6.3 billion cubic meters are exported. Production is carried out at 37 fields. The largest of them are Lehman-Benk, Brent, Morecamp (1/2 of the production volume). The UK retains imports of natural gas from Algeria, Qatar and Norway. Gas production is carried out by the state-owned company British GAZ.
Power engineering. The country’s electricity needs are met entirely by domestic sources.
Most of the electricity is produced at thermal power plants (67.7%), operating on coal, gas and fuel oil. The largest thermal power plants (with a capacity of more than 1 million kW) are located near large cities: London, Birmingham, Liverpool, etc.
Over the past two decades, nuclear energy has developed rapidly in the country. Nuclear power plants produce 29.3% of electricity. 11 nuclear power plants with 28 nuclear reactors with a total capacity of 13,820 MW have been built.
Hydroelectric power plants account for 3% of electricity production. The largest hydroelectric power stations are located on the Trent River and the Thames River. The largest number of hydroelectric power plants is built on the rivers and lakes of the Scottish Highlands.
Total electricity production in 2000 amounted to 337 billion kWh, which is the 9th place in the world.
In 1970, the construction of the Supergrid unified power transmission system was completed in the UK.
Ferrous metallurgy is the oldest branch of industry. The industry developed in favorable conditions. The country was rich in coking coals, coal seams often contained iron ore or it was mined nearby. The third component required by metallurgy is limestone. They are found in the British Isles almost everywhere. Coal basins, near which metallurgical centers developed, are located not far from each other and from large seaports. This now facilitates the delivery of raw materials from other countries, since own production has practically ceased. Iron ore is currently imported from Canada, Liberia, Mauritania.
The largest metallurgical centers are located on the coast, as they work on imported iron ore. These are Scunthorpe in Humberside, Port Talbot and Llanwern in South Wales, Redcar in Teesside, Ravenskrage in Scotland. In the central part of the country, only Sheffield has retained its importance, where high-quality steels are produced.
The largest steel producers in the UK are multinational corporations LNM – 4th place in the world and British Steel – 6th in the world in steel production.
In 2000, the total production amounted to about 18 million tons.
Non-ferrous metallurgy is one of the largest in Europe. The industry operates almost entirely on imported raw materials, so the smelting of non-ferrous metals tends to port cities. Exports of non-ferrous metals by value far exceed exports of ferrous metals.
Great Britain is one of the major exporters of such non-ferrous metals as zirconium, beryllium, germanium, uranium, niobium, etc., used in the nuclear and aviation industries, electronics. The main buyers of non-ferrous metals from the UK are the Usa and Germany. At the same time, the domestic industry meets only part of the country’s needs for the most important non-ferrous metals. For example, the need for copper and zinc is provided by 1/2, in aluminum – by 2/3. The needs for tin and lead are fully covered.
The main non-ferrous metallurgy area is the West Midlands. Major centers of the industry are Liverpool, London, Sounsey. Aluminium is produced in factories located near hydroelectric power plants in Scotland. Three aluminium smelting plants are located on Anglesey Island. Two companies dominate the industry: British Aluminum and Alkan Industries.
Chemical industry. In the post-war years, this industry grew faster than others. Its raw material base has changed. The discovery of our own large deposits of oil and natural gas made it possible to develop synthetic chemistry near oil refineries at a rapid pace. In terms of the volume of chemical industry production, the UK is inferior to the USA, Germany and Japan, and for some types – both France and Italy. A third of the production is exported, its volume exceeds imports. In this industry, the position of foreign capital, especially American, is strong.
Great Britain stands out for its large scale of production of synthetic fibers, various types of plastics, dyes, detergents, pharmaceuticals (the world’s fourth largest manufacturer of medicines).
In basic chemistry, the production of sulfuric acid, soda and chlorine increased.
The production of mineral fertilizers has expanded (phosphorites are imported).
The main areas of the chemical industry are the South East, where many fine chemical enterprises, especially pharmaceutical ones, are concentrated in Greater London, and large petrochemicals are concentrated in Foley. Lancashire and Cheshire concentrated basic chemistry enterprises. In the north-east of England there is a complex of production of organic and inorganic chemistry (Birmingham – Wilton – Tisport), and petrochemical production – in Humberside near Immingham. In general, petrochemicals gravitate to port cities where oil arrives. Mineral fertilizers are produced in the South East and Yorkshire.
Mechanical engineering and metalworking. Mechanical engineering is the leading branch of British industry, provides the country with 2/5 of the value of products, 1/3 of the volume of exports. In foreign trade in machinery and equipment, Great Britain shares with France 4-5 places among developed countries.
In the last decade, the volume of investments in advanced and knowledge-intensive industries has increased – machine tool building, electrical engineering, aviation, electronics.
The structure of British mechanical engineering is more complex and diverse than in other Western European countries, with the exception of the Federal Republic of Germany. The products of the industry are of high quality, which is ensured by the high qualification of engineers and workers.
Electrical engineering and electronics took first place in the structure of mechanical engineering in terms of the cost of production. The most dynamically developing electronics, but the main position here is occupied by American capital, and in the production of consumer electronics – Japanese. British firms are traditionally strong in the production of radio electronic equipment and communications (British Telecom, Rakal Electronics, Siemens-Plessis).
In instrument-making, more than 2/3 of the cost of production falls on scientific and industrial instruments, including a number of new types of control, measuring and diagnostic equipment. The production of watches and photographic equipment was also developed.
After the severe recession of the 1970s, transport engineering is developing at a high pace. The revival in the industry is caused by the influx of Japanese, American and German capital.
In the automotive industry, 85% of the production volume falls on the following firms: Rover Group (a former English company acquired in 1994 by the German company BMW), Nissan, Honda, Tayota, Ford, General Motors, Talbot (a branch of the French company Peugeot-Citroën). In 2000, 4.8 million cars and trucks were produced, which is the eighth place in the world.
Car production is concentrated in the West Midlands (Birmingham, Coventry) and in the South East (Greater London, Oxford, Luton).
Production output in the aircraft missile industry is growing rapidly. In terms of the share of products on the world market, the UK ranks fourth (after the USA, Germany, France). The industry also produces military products. The leading position in the industry is occupied by the privatized company British Aerospace, specializing in the production of a wide range of various aircraft, including military ones (the Harrier tactical vertical take-off and landing fighter, the Tornado aircraft, Sea King, Lynx helicopters, etc.), spacecraft, missiles. The English company Rolls-Royce is one of the world’s largest manufacturers of aircraft engines.
Cooperation is widely developed in this industry. The created European consortium “Airbus Industry” includes the companies “British Aerospace”, “Aerospatial” (France), “Daimler-Benz-Aerospace” (Germany), “CASA” (Spain). Currently, this consortium controls 1/3 of the global civil aviation market.
The aircraft missile industry is concentrated around Greater London, Bristol, the East Midlands and the West Midland Conurbation.
Shipbuilding was also developed. The UK produces almost all types of ships, including warships, submarines. However, due to the high cost, British ships, despite the high quality, are not competitive, so their production is reduced. The main centers of shipbuilding were: Belfast, Barrow in Furness, as well as Clyside.
Light industry. It has a special place. It played an outstanding role in the industrial development of the country, in the introduction of machine production in the world. Before the First World War, it occupied an uncompetitive position in the world, it was distinguished, as now, by high quality and diversity. Since the economic crisis of the 30s of the last century, this industry has been in a state of depression. Now the UK has turned from an exporter into a major importer of cotton fabrics.
Wool production focused on the domestic market and wealthy buyers of the United States and Western Europe. It was less dependent on imported raw materials, and therefore the decline in it is less sharp.
The geography of the textile industry has been preserved since the era of the Industrial Revolution. The main part of cotton production is concentrated in Lancoshire, woolen – in Yorkshire, knitted – in the West Midlands, linen – in Northern Ireland. The production of fabrics from synthetic fibers gravitates towards these same areas.
The service sector in post-industrial Great Britain is the most important sphere of the economy. Financial services, tourism, business services and others have been developed. The UK is one of the leaders in the provision of services in the global market. The volume of exports of services is 10% of world exports in this area.
The most important sphere of the economy is finance, which creates 25% of the country’s GDP. It employs about 4 million people, 12% of the country’s workforce. The capital of the country , London – is also the world financial capital, the largest financial center of the planet. Among the financial services, banking activities should be highlighted (in addition to English, 50 large banks in the world are represented in London), insurance, the derivatives market, the bond market, financial leasing, trust operations with foreign assets, operations with precious metals. Other major financial centers are: Liverpool, Manchester, Edinburgh, Cardiff.
The UK is one of the world’s tourism centres. The industry employs 7% of the economically active population. The income received from tourism exceeds $ 8 billion a year. London became a major tourist center.
Transport is the most important branch of the service sector. In Great Britain, once the world’s main maritime power, about 90% of cargo turnover (including external transportation) is accounted for by the navy (433 ships). In terms of cargo turnover, it ranks 14th in the world. No port in the country is among the ten largest in the world. The largest ports of the country are London with a cargo turnover of 60 million tons per year; Liverpool – 10 million tonnes; Southampton – 30 million tonnes.
The share of road transport in domestic cargo turnover and passenger turnover is 90%.
Rail transport now accounts for less than 1/10 of domestic freight turnover and passenger turnover. The length of the railways is 16.7 thousand km. Since 1993, a railway tunnel has been operating under the English Channel.
The importance of pipeline transport (5% of cargo turnover) is growing with the start of oil and gas production in the North Sea. 75% of oil comes to land through oil pipelines.
Great success of Great Britain in the development of civil aviation. British Airways is the world’s largest airline, and London Heathrow Airport is the largest international airport.
Uk agriculture is one of the most productive and mechanized in the world. It employs about 1.1% of the economically active population. The overall level of self-sufficiency in agricultural products was 82% in the mid-1990s. Full provision has been achieved for the following products: poultry, pork, beef, milk, wheat, barley, oats, all vegetables. The total area of cultivated land is 18.5 million hectares.
More than 2/3 of the agricultural land is in the hands of farmers. However, it is still typical for great landowners (landlords) to lease land. The size of the land owned by one farmer averages 70 hectares.
Xx century. there were 244 thousand farmers.
The leading branch of agriculture is animal husbandry (62% of the value of agricultural products). Cattle (about 12 million heads), pigs (8 million heads), sheep (43.6 million heads) are raised. The development of this industry in the 1990s was greatly damaged by epidemics of spongiform encephalitis and Creutzwald-Jacobs disease (“mad cow disease”).
In crop production, about 1/3 of the arable land is occupied by grain crops. Wheat and barley are grown. Part of the grain is exported. Under vegetable and fodder crops, orchards, berries, 4% of agricultural land is occupied , more than 50% – under crops of perennial grasses.
The main agricultural areas are located in East and South East England, around Wash Bay.