With many similarities to the United States in all but government structure, it is an ideal country to study the impaction of economic, political and social factors due to its long history and the perception of the United Kingdom as a European leader. Economic Indicators According to Vernon Bogdanor in an article reviewing the economics of the UK in the 1960s, Economic problems in the United Kingdom required not tinkering with the exchanges but supply-side remedies better management, higher-quality education, trade union reform, improvements in productivity and an end to restrictive practices.
The government during this period encouraged by economists in the Treasurys Economic Section , sought to manage output and employment by fine-tuning the economy on the basis of national income forecasts via changes in taxation and public spending and remove supply-side impediments to growth. In the 1970s, the United Kingdom was recognized worldwide for its long history of providing the services of the best bankers, financiers and traders.
Public transportation, congested roadways, sewers and water supplies and ancient housing were all immediate problems that faced the country to bring it up to modern economic standards . Creating a government policy for the investment of capital gains was seen as essential to ensure the United Kingdoms economy would thrive. With all of these problems, currencies in Europe were still revalued higher after the devaluation of the American dollar in 1971 although inflation jumped 25% just four years later.
Strengthening its position, Britain agreed to full membership in the European Economic Community in 1972 and joined the Common Market in 1973. Currently the United Kingdom enjoys the worlds 6th freest economy and is ranked number one out of all European countries, scoring highly in investment freedom, trade freedom, financial freedom, property rights, business freedom, and freedom from corruption .
In the 1980s, Prime Minister Margaret Thatcher implemented market reforms and since then the United Kingdom has seen the steady rise of economic growth. The UK to this day is one of the worlds leading centers of commerce. Their exports of manufactured goods, chemicals, and foodstuffs are all strong, however, the decline in North Sea oil production required the UK to import more oil and consequently made its economy more vulnerable to future supply and demand in the global energy market. Gross national income (GNI) in 2005 was at $2.
3 trillion (in US dollars) according to the World Bank, which defines this value as the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad . GNI per capita stands at $37,750 while total Gross Domestic Product (GDP), at $2. 2 trillion or 1. 8%, experienced 3. 1% growth in 2004 alone. Inflation rate as GDP deflator is at 2%, showing price change in the economy as a whole. Agriculture remains at 1% of total GDP, industry at 26.
2%, value-added services 72. 8%, exports 26. 1%, imports 30%. Cash deficit 2. 9% of GDP. Military expenditure for the UK rests at 2. 6% of GDP. Net inflows of foreign direct investment are %158. 8 billion. GDP per capita growth is comparable to the United States at 2 2. 9% in the past decade. As shown in the chart in Appendix A, GDP growth in the UK is rivaled only by the United States with a very strong domestic demand. Income per person is also comparable and the UK is considered a high income country. Total government spending equals more than two-fifths of GDP while external debt equaled $7.
1 trillion in 2005. As far as business, potential investors in the United Kingdom receive seven types of access to the ownership and financial information for any publicly listed companies and are able to start up within a matter of just over two weeks. Regarding the ease of doing business, the UK ranks amongst the top 20 economies alongside New Zealand, United States, Singapore, Hong Kong/China, Australia, Norway, United Kingdom, Canada, Sweden, Japan, Switzerland, Denmark, Netherlands, Finland, Ireland, Belgium, Lithuania, Slovakia, Botswana, and Thailand.