Economy In UK: What You Need To Know And How It Affects You
Economy in UK has been an independent, developed and international trading one ever since the 19th-century industrial revolution.
The use of new basic materials and the invention of new machines has provided innovative ways for people to on working efficiently. This has changed the way people worked and live drastically. Society has been transformed into one that is dominated by industry and machine manufacturing.
In 2020, the gross domestic product (GDP) of the UK was 1.96 trillion British pounds, a sharp decrease of 216 billion pounds as compared to 2019 (2.17 trillion pounds). The UK economy has essentially shrank by a record of 9.9 percent due to the economic downturn of the Covid-19 pandemic and subsequent lockdowns. This has caused severe damage to many industries, especially in the service and tourism sectors.
Despite the current situation, the UK still remains a major investment and trading partner to many others across the world.
Economy in UK: From past to present
The history of the UK’s economy was certainly not a smooth-sailing one. There were many ups and downs throughout the economy in UK. There was a sudden rapid economic growth in the years after World War 2. Following this was another financial crisis during the Suez Crisis in 1956 which weakened the government’s reputation and underlined the fragility of post-war British finances. Despite all the challenges that came its way, the UK still emerged as one of the largest economies in the world today.
The country may have won in World War 2, but its manufacturing sector was in a very bad state. By 1945, the country had lost most of its pre-war export trades because of the prolonged warfare and heavy losses of merchant shipping. This loss of exports has caused a serious shortage of US dollars, which were crucial to servicing Britain’s war debt and maintaining imports from the United States.
The country saw an economic growth of GDP from 543.3 billion in 1960 to 10.252 trillion in 2000 due to industrialisation in the years after World War 2 ended.
The election of Margaret Thatcher in 1979 marked the start of a new approach to economic policy. She and her conservative government went for the privatisation of publicly owned corporations that had been nationalised by previous governments. It was believed that by doing so, the government efficiency could be increased.
Privatisation is basically the opposite of nationalisation and refers to a policy resorted to by governments that want to keep the revenues from major industries, especially those that might otherwise be controlled by foreign interests. Unfortunately, privatisation was accompanied by widespread labour unrest and led to the loss of tens of thousands of jobs in the coal-mining and heavy industrial sectors.
The 1980s and 1990s were also a time of uncertainty for many workers as income disparity increased. Even though unemployment and inflation rates gradually reduced, it remained high until the late 1990s.
2000 – 2010s
According to the UK Office for National Statistics (ONS), the UK entered a recession in Quarter 2 (April to June) of 2008, accompanied by rising unemployment which increased from 5.2% in May 2008 to 7.6% in May 2009, and barely managed to recover its economy in Quarter 4 (Oct to Dec) of 2009. The 2008 recession was one of the worst economic crises in the UK ever since the Great Depression of the 1930s.
2010s – present
Euroskepticism was a movement introduced in the 1990s by people who advocated for political and economic disengagement of the UK from the EU. The support gained for this movement was so great that a referendum on whether the UK should withdraw from the EU was put to the electorate. It later received 52 percent votes from those who decided on the UK’s withdrawal from the EU. The UK officially left the EU on 31 January 2020 and eventually led the UK into a period of economic transition and uncertainty.
As if coping with new economic plans after exiting EU wasn’t challenging enough, the economy in UK took a greater hit due to the COVID-19 pandemic. This drove the country into the deepest recession of any global economy as the UK experienced lockdowns. Travelling was restricted and interactions were kept to the minimum in the interests of public safety and health.
Industries that were most affected by the lockdown measures included the service, production and construction sectors. As a result, several businesses have closed temporarily or even collapsed completely due to the economic damage, leaving thousands of workers jobless. Fortunately, signs of the economy slowly recovering to post-pandemic levels are evident and clear as appropriate measures are taken to control the spread of virus both in an effective and efficient manner.
It is difficult to say when the economy in UK will recover. Especially given the uncertainties caused by the pandemic, the shape of UK’s economic recovery will be heavily influenced by the ability of the country to keep new cases and variants under control. According to Statista, the UK’s GDP is expected to grow by four percent in 2021 and by a further 7.3 percent in 2022. Economic forecasts for 2023, 2024 and 2025 are at 1.7%, 1.6% and 1.7% respectively.
What appeals to the different buyer-personas
A fair and strict legal system
The UK is a democratic country with a predictable and transparent legal system. It treats everyone with equality and does not act in prejudice before the law. The UK government provides latest information on the various types of legal factors and trading regulations. They also inform the people about tax and national insurance affecting businesses as well as employment legal requirements to protect the interests of workers, whether foreign or domestic. This is to ensure that workers have a safe environment to work in and are not being underpaid.
Free and unrestricted trade
Did you know that the UK is the fifth-largest trading nation in the world? The total value of imports and exports when combined together is actually nearly half the country’s GDP. Trading has always been a vital part of the UK’s economy, especially when the volume of demand for both the imports and exports has grown steadily in recent years. Typical exports include chemicals, electrical and electronic equipment such as computers, oil, machinery, automobiles and other transport parts/equipment.
The UK is known for its free and unrestricted trades, as well as winning the hearts of many international trade organisations and business owners (like yourself) from around the world. Besides this, the UK’s large and growing economy makes it a particularly popular investment location in the world, allowing the UK to fund the trade deficit caused by its reliance on foreign imports. Countries like Japan became a significant investor in the UK’s local production.
Overall, the Brexit new plans from the UK government are aimed at helping the country thrive as a modern and independent economy. This means that as an expat, you can look forward to an interesting journey with the UK, whether in the business aspect or simply living there to enjoy.
For more information on the UK and EU trade deals, the Brexit rules and how Brexit might affect you, your family or your business, click here.
Why UK’s economy is ideal for you to consider living, working or doing a business there
1. Cost of living in the UK
According to the latest database provided by Numbeo on the current cost of living index, the UK is ranked as the 27 most expensive countries to live in. Undoubtedly, the cost of living in the UK is on the high end.
As of October 2021, the average monthly cost of living in the UK for a single person and family of four is £1,998 and £3,554 respectively. This average includes housing rent, utility costs, food, transportation, phone bills, and many others.
Despite being costly, the UK is still one of the most popular countries to visit and live in. The existence of an open market with minimal restrictions for business owners makes the UK a popular spot for expats. The abundance of job opportunities and the wide range of experiences it has to offer also means that the UK is a popular destination.
2. Starting a business in the UK
Are you considering starting your own business here in the UK? Well, you have chosen just the right place to do so. According to the 2019 data collected by the World Bank, the UK was ranked eighth as one of the most business-friendly countries in the world.
The company law, the commercial code, and specific regulations and fee schedules are used as sources for calculating costs. The indicator, of course, excludes bribes. So, if you’re worried about any financial costs related to starting up a business, you can certainly put your mind at ease now that you know there are no costs involved.
3. Job opportunities
The June to August 2021 figure estimates showed continuing signs of recovery in the labour market, with a quarterly increase in the employment rate, while the unemployment and economic inactivity rates decreased.
The number of job vacancies in July to September 2021 was a record high of 1,102,000 – an increase of 318,000 from its pre-pandemic January to March 2020 level. The largest quarterly increase of these job vacancies was seen in Wholesale and retail trade and the repair of motor vehicles and motorcycles, which was up by 35,000 (32.4 percent).
The UK has a highly skilled, flexible and dynamic labour market, with less labour regulation than most other European countries. So if you’re looking for job opportunities in the UK, you can easily find one which matches your skill sets, preference and experience level without going through much hassle.