The United Kingdom is the fifth-largest national economy in the world measured by nominal gross domestic product (GDP), ninth-largest in the world measured by purchasing power parity (PPP), and nineteenth-largest in the world measured by GDP per capita, comprising 4% of world GDP. It is the second-largest economy in the European Union by both metrics. In 2016, the UK was 19/28 for GDP growth in Europe, with the third lowest unemployment rate.

1. UNITED KINGDOM(UK)
ECONOMIC OVERVIEW
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN
IRELAND
Presented by : Sumaira Fatima

2. THE UNITED KINGDOM OF GREAT
BRITAIN AND NORTHERN IRELAND
 Britain, is a sovereign country in western Europe.
 The United Kingdom, with a $2.65 trillion GDP, is currently the world’s
fifth largest.
 The United Kingdom is the 78th-largest sovereign state in the world and
the 11th-largest in Europe. It is also the 21st-most populous country.
 The United Kingdom is a constitutional monarchy with a parliamentary
system of governance.
 The capital of the United Kingdom and its largest city is London, a global
city and financial center .
 The United Kingdom is a developed country and has the world's fifth-
largest economy by nominal GDP and ninth-largest economy by
purchasing power.
 The welfare state of the United Kingdom comprises expenditures by the
government of the United Kingdom intended to improve health,
education, employment and social security. The British system has been
classified as a liberal welfare state system

3.  The economy of England is the largest economy of the four
countries of the United Kingdom.
 England is a highly industrialized country. It is an important
producer of textiles and chemical products.
 The UK remains a great power with considerable economic,
cultural, military, scientific and political influence internationally.
 The UK has been a permanent member of the United Nations
Security Council. the European Union (although it has voted to
leave), It has been a leading member state of the EU. However,
on 23 June 2016, a national referendum on the UK's membership
of the EU resulted in a decision to leave, and its exit from the EU
is currently being negotiated.
 The UK is a member of the Commonwealth of Nations, the G7,
the G8, the G20, the International Monetary Fund, the
Organization for Economic Co-operation and Development, the
Organization for Security and Co-operation in Europe, the World
Bank, the World Trade Organization, Asian Infrastructure
Investment Bank .
 Currency :Pound sterling(GBP; £)

4. SECTORS OF THE ECONOMY IN UK:
PRIMARY SECTOR: The UK's primary industry sector was once dominated
by the coal industry, heavily concentrated in South Wales.
The number of pits and miners have been slashed, and output fell by more
than 75% between 1981 and 2003. The remaining pits produced 17.2 million
tons of oil equivalent in 2003, making the UK the 15th largest coal producing
nation, compared with 4th in 1981, according to the BP Statistical Review of
World Energy 2004.
A closely related industry is natural gas which, since the 1970s, has supplied
all of the UK gas needs, replacing poisonous coal, or town, gas.
In the UK, about 3% of the labor force is engaged in agricultural production.
In the UK, agriculture, mining and extractive industries accounts for around
12% of GDP.
Manufacturing 10%, and the service sector 80%. (UK GDP stats, weights)

5. SECONDARY SECTOR(MANUFACTURING)
At one time or another virtually every product that can be imagined
has been made in the UK. In particular its heavy manufacturing drove
the industrial revolution, starting with the first blast furnace at
Coalbrookdale in Shropshire.
The automotive industry can be traced back to the 1890s (growing after
World War I), by which time industries such as shipbuilding, textiles
and steel were already established.
In the inter-War years modern industries emerged, with aerospace
forming clusters around London, Bristol and in Hertfordshire.
Today there is no heavy manufacturing industry in which UK-based
firms can be considered world leaders and no product in which a UK
city or region is the world leader.

6. • A map of the major UK cities gives a good picture of where manufacturing
flourished, and often specializations could be identified, in particular:
 Birmingham, (automotive)
 Glasgow (shipbuilding),
 London (everything),
 Manchester (textiles),
 Newcastle (shipbuilding and steel),
 Nottingham (apparel, medicine),
 Sheffield (steel and steel products)
 Sunderland (shipbuilding and coal-mining)
 Leeds (textiles and engineering)
 Belfast (shipbuilding and textiles)
 Cardiff (steel)

8. TERTIARY – SERVICE SECTORS
 One sign of a highly developed nation is a large and
sophisticated service sector. In 1997 Britain's service
sector was responsible for about 63 percent of the GDP
and almost three-quarters of employment, about 17
million workers.
 Britain’s service industry recorded its 12th consecutive
quarter of growth on Thursday and now accounts for
almost 80 per cent of the economy.
 Britain developed sophisticated banking, financial,
insurance, and shipping operations as early as the 17th
century to support its expanding international ocean
trade
 Lloyd's of London, an early insurance house, Lloyd's
now insures approximately half of the world's shipping
and cargoes as well as much of the aircraft industry.
 London is the world's leading center for insurance and
handles 20 percent of the world's insurance business. It is
also the world's largest center for foreign exchange, or
currency, trading.

9. TERTIARY – SERVICE SECTORS
 In a developed economy like the UK, the service sector is the biggest component of the economy, comprising
nearly 80% of GDP and a similar ratio of employment.
 In the UK, the main sectors of the service sector include:
 Retail industry
 Computer and I.T. services
 Hotels and tourism services
 Restaurants and cafes
 Transport – rail, bus, air, sea
 Communication
 Banking services
 Insurance services
 Pension services
 Food and beverage services
 Postal services

12. ECONOMIC CONDITIONS
 UK economic growth held up better than expected in the six months
following the Brexit vote, but this began to ease in early 2017 as inflation
has risen, squeezing household spending power.
 The British economy grew by 0.5% compared with the previous three
months.
 There were some marked differences between sectors. Service industries
grew quite strongly, while manufacturing and construction slipped back.
For manufacturing it was the third consecutive decline.
 Over a slightly longer period, there is certainly a good story to be told about
the British economy. Quite decent growth, low unemployment and low
inflation.
 But there is another side. Inflation is actually too low, average incomes are
barely up to pre-crisis levels and there is a persistent problem of feeble
improvements in productivity.
 Jobs: The number of people with jobs is at an all-time high of more than 31
million. About 74% of the population aged 16 to 24 are employed.
Unemployment in the UK is low at 5.4% of the labor workforce.

14. UK INFLATION
 UK inflation was flat, with the consumer price
index coming in at 2.3% in March for the second
month in a row.
 That was still the highest level for more than
three years, and raises the question of whether
the Bank of England should raise interest rates.
 But with wage growth slowing, real incomes are
being hit.
 UK house prices rose by 5.8% in February but
London saw its slowest growth since April 2012.
The increase has pushed the rate above the Bank
of England's 2% target.
 Food prices recorded their first annual increase
for more than two-and-a-half years, standing
0.3% higher in February than a year earlier.
 The Bank of England has said it expects
inflation will peak at 2.8% next year, although
some economists think the rate could rise above
3%.

15. TAXATION IN THE UNITED KINGDOM
Taxation in the United Kingdom may involve payments to a
minimum of three different levels of government: the central
government (Her Majesty's Revenue and Customs),
devolved national governments and local government.
Central government revenues come primarily from income
tax, National Insurance contributions, value added tax,
corporation tax and fuel duty.
Local government revenues come primarily from grants
from central government funds, business rates in England
and Wales, Council Tax and increasingly from fees and
charges such as those from on-street parking.
 In the fiscal year 2014–15, total government revenue was
forecast to be £648 billion, or 37.7 per cent of GDP, with net
taxes and National Insurance contributions standing at £606
billion.

16.  Personal taxes
 Inheritance tax
 Council tax
 Sales taxes and duties
 Value added tax
 Excise duties
 Stamp duty
 Motoring taxation
 Business taxes
 Corporation tax
 Business rates
 National Insurance contributions
 Capital gains
Types of taxes:

19. EXEMPTIONS ON INVESTMENT
 Certain investments carry a tax favored status including:
1. UK Government Bonds (Gilts)
2. National Savings and Investments
3. Individual Savings Accounts (ISAs)
4. Pension funds
5. Venture Capital Trusts
6. Enterprise Investment Schemes
7. Insurance bonds
8. Offshore trusts and companies

20. UNITED KINGDOM GDP
UK’s GDP Growth Performance:
 In the 10 years before the Great Recession, from 1999 to 2008, the UK’s
gross domestic product grew 2.8% on average per year.
 As a consequence of overinvestment in the housing market and consumer’s
strong dependence on credit, the economy was hit very hard by the financial
crisis and the credit crunch.
 In 2009, GDP fell 5.2%, mainly due to plummeting private fixed investment.
However, GDP rebounded in 2010 to a 1.7% expansion.
 In the three subsequent years, however, growth did not post figures as strong
as those before the crisis; average GDP growth was1.0% in the 2011–2013
period.

22. HIGHEST GDP CONTRIBUTIONS
• The service sector dominates the UK economy,
contributing around 80% of GDP; the financial services
industry is particularly important, and London is the
world's largest international financial center.
• Britain's aerospace industry is the second- or third-largest
national aerospace industry depending on the method of
measurement.
• Its pharmaceutical industry plays an important role in the
economy and the UK has the third-highest share of global
pharmaceutical research and development.
• Of the world's 500 largest companies, 26 are
headquartered in the UK. The British economy is boosted
by North Sea oil and gas production; its reserves were
estimated at 2.9 billion barrels in 2015, although it has
been a net importer of oil since 2005.

23. INTERNATIONAL TRADE
 The United Kingdom is the 9th largest export economy in the world and the 11th most
complex economy according to the Economic Complexity Index (ECI).
 The United Kingdom exported $425B and imported $606B, resulting in a negative trade
balance of $181B. In 2015 the GDP of the United Kingdom was $2.86T and its GDP per
capital was $41.8k.
 The United Kingdom exported $425B, making it the 9th largest exporter in the world.
 During the last five years the exports of the United Kingdom have increased at an annualized
rate of 2%, from $383B in 2010 to $425B in 2017.
 The most recent exports are led by Gold which represent 9.8% of the total exports of the
United Kingdom, followed by Cars, which account for 9.6%.
 The top export destinations of the United Kingdom are the United States ($54.7B), Germany
($39.5B), Switzerland ($32.5B), China ($27.6B) and the Netherlands ($23.9B).
 The top import origins are Germany ($93.9B), China ($62.8B), the United States ($44.8B),
the Netherlands ($44.4B) and France ($37.6B).

24. The top exports of the United Kingdom are Gold ($41.6B), Cars ($40.8B),
Packaged Medicaments ($19.9B), Gas Turbines ($14.7B) and Refined
Petroleum ($13.2B), using the 1992 revision of the HS (Harmonized System)
classification.
 Its top imports are Cars ($49.9B), Packaged Medicaments ($21B), Refined
Petroleum ($20.2B), Crude Petroleum ($17.3B) and Vehicle Parts ($15B).
United Kingdom had a negative trade balance of $181B in net imports. As
compared to their trade balance in 1995 when they still had a negative trade
balance of $31.6B in net imports.

29. MONETARY & FISCAL POLICIES OF UK
In the UK, Monetary policy has been given to the Bank of England. Therefore, the
Bank of England has independence in setting interest rates. The government only
set the inflation target of 2% inflation.
In the UK the target of Monetary policy is to keep inflation within a target of CPI
2% +/-1. They also consider other macroeconomic variables such as growth and
unemployment.
UK Monetary Policy is set by the Monetary Policy Committee (MPC) of the Bank
of England. They are independent in setting interest rates, but have to try and meet
the government’s inflation target.
The Bank of England study inflationary trends in the economy. This involves
looking at a range of economic variables such as:
Unemployment, consumer confidence, spare capacity in the economy, exchange
rate index, house prices, economic Growth.

32. UK fiscal policy: In 2009, the government
pursued expansionary fiscal policy. In response to
a deep recession (GDP fell 6%) the government
cut VAT in a bid to boost consumer spending.
This caused a big rise in government borrowing
(2009-10).
(Government borrowing also rose because of the
recession leading to lower tax revenue)When the
new coalition government came into power in
May 2010, they argued the deficit was too high
and then announced plans to reduce government
borrowing.
 This involved spending limits.
 This austerity measures were a factor in causing
lower economic growth in 2011 and 2012.

33. ECONOMIC REFORMS
The UK Banking Reform: The global economic crisis which began in 2007, led to a host
of regulatory reforms across the financial services industry designed to protect the
taxpayer and the wider economy in the event of another crisis.
 A number of the reforms require changes to the structure of banking groups so that, in the
event of severe financial stress an institution can be recovered or, in financial failure,
swiftly resolved.
 In 2013, legislation was passed in the UK requiring that certain universal banks in the UK
such as HSBC, which offer personal, commercial and investment banking services,
separate, or ring-fence, their UK retail and commercial operations from wholesale or
investment banking activity.
 The Financial Services (Banking Reform) Act 2013 (the Banking Reform Act) is a key
part of the UK government’s plan to create a banking system that supports the economy,
consumers and small businesses.

34. Impact Of Brexit: The EU would lose substantial hard and soft power assets although
Brexit could lead to greater EU political integration and more coherent external
representation in institutions and on external policy.
 The overall macroeconomic impact of Brexit is hard to quantify:
 There are three broader ways in which the UK and the rest of the EU would be
affected by Brexit, which are not captured by macroeconomic models. The first
channel is uncertainty.
 The second way is through the political dynamic between large states in an EU
without the UK.
 The third way is through political contagion.
 We conclude that the member states most exposed to Brexit are the Netherlands,
Ireland and Cyprus.

35. RECOMMENDATIONS
Our recommendation is uk should stay in EU , Reasons to Stay are as follows:
I. Jobs :Around 3.5 million British jobs are directly linked to British membership of the
European Union’s single market – 1 in 10 British jobs.
II. Exports & Investment :The EU buys over 50 per cent of UK exports (54 per cent of goods,
40 per cent of services).Over 300,000 British companies and 74 per cent of British exporters
operate in other EU markets. American and Asian EU firms build factories in Britain because
it is in the single market.
III. Trade :The EU negotiates trade agreements with the rest of the world. Outside the EU Britain
would have to renegotiate trade deals alone. While the EU is the world’s largest market, a UK
outside the EU would not be a high priority for other counties to negotiate a trade deal.
IV. Power to curb the multinationals :The EU has taken on multinational giants like Microsoft,
Samsung and Toshiba for unfair competition. The UK would not be able to do this alone.
V. Equal pay and non-discrimination :Equal pay for men and women is enshrined in EU law,
as are bans on discrimination by age, race or sexual orientation. This benefits Britain and
British people who live in other EU countries.

36. CONCLUSION
• The basis of the British economy is its industry, which produces about half of GDP and
exports. Recently, industry of the country has undergone significant restructuring,
“reindustrialization”.
• UK economic growth held up better than expected in the six months following the Brexit
vote, but this began to ease in early 2017 as inflation has risen, squeezing household
spending power.
• In our main scenario, we project UK growth to slow to around 1.6% in 2017 and 1.4% in
2018 due to slower consumer spending growth and the drag on business investment from
Brexit-related uncertainty.
• Service sector growth will slow but remain positive in 2017-18, but construction may suffer
from lower investment levels. Manufacturing and services exporters should benefit from the
weaker pound.
• Longer term, we expect the UK economy to grow at around 2% after Brexit, with consumer
spending rising at a similar rate but increasingly focused on housing and utilities, financial
services and personal care. Spending on food, clothing, alcohol and tobacco will take a
declining share of total spending