The UK was the first to industrialize during the 18th century industrial revolution. As a trading nation with limited domestic markets and resources, it relies heavily on exports and imports. While the UK pioneered industrialization, by the early 20th century its economy experienced both absolute and relative decline as other nations like the US and Germany industrialized. Recent economic history saw mixed success from Margaret Thatcher's privatization policies in the 1970-80s and engagement with institutions like the IMF. Today the UK has a service-based economy, with sectors like aerospace and banking remaining important.

1. The U.K. EconomyThe U.K. Economy
Unit 5Unit 5

2.  Contents:Contents:
 1.1. A Brief Introduction to U.K. EconomyA Brief Introduction to U.K. Economy
 2.2. Absolute Decline and Relative DeclineAbsolute Decline and Relative Decline
 3.3. Recent HistoryRecent History
 4.4. The Current U.K. EconomyThe Current U.K. Economy
 5.5. Case Study: The AerospaceCase Study: The Aerospace

3. A Brief Introduction to U.K. EconomyA Brief Introduction to U.K. Economy
 Britain was the first country to start the
industrial revolution in the 18th century.
Britain is a capitalist country.
 The characteristic of the economic system of
capitalism is that it protects private
enterprise.
 Britain began its market economy about 300
years ago.

4. A Brief Introduction to U.K. EconomyA Brief Introduction to U.K. Economy
 Britain is a trading nation. (Why?)(Why?)
In Britain, the domestic market is limited. So,
it has to find more markets outside the
country. It has to find more markets in the
world.

Eg.Eg. Each year Britain exports some one-third
of its gross domestic product. It is the fourth
largest exporter in the world. Its exports
account for about 5% of the world’s total
trade volume.

5. A Brief Introduction to U.K. EconomyA Brief Introduction to U.K. Economy
 Britain is also one of the world’s largest
importers.
 Because Britain lacks raw materials, or we
may say its home supply of raw materials is
inadequate, Britain has to buy up a large
proportion of the raw materials sold in the
world market. Britain’s major trading partners
are industrialized countries.

6. Absolute Decline and Relative DeclineAbsolute Decline and Relative Decline
 What is absolute decline?
 What is relative decline?
 Does British economy belong to the
former one or the latter one?

7. Absolute Decline and Relative DeclineAbsolute Decline and Relative Decline
 Britain was the first country in the world to
start the industrial revolution. It took the lead
in the development of economy in the world in
the 19th
century. But by 1900, it was overtaken
by both the US and Germany.
 In the Post-war period, the U.K. economy
experienced boom and bust (the fluctuation of
U.K. economy).

8. Absolute Decline and Relative DeclineAbsolute Decline and Relative Decline
 The reasons of the economic decline:
 1) Being in debt;
 2) The end of the empire;
 3) Large military spending;
 4) A catching-up by Germany and Japan;
 5) Lack of a close relationship between
industry and banks.

9. Absolute Decline and Relative DeclineAbsolute Decline and Relative Decline
 A Characteristic of the UK economy----A
low rate of domestic industrial investment
coupled with a very high rate of overseas
investment.

10. Recent HistoryRecent History
 Britain’s slow growth of productivity, soaringBritain’s slow growth of productivity, soaring
inflation, and large unemployment gave birthinflation, and large unemployment gave birth
to the mocking term “British Disease”.to the mocking term “British Disease”.
 In 1979, Margaret Thatcher became Britain’sIn 1979, Margaret Thatcher became Britain’s
first-ever woman Prime Minister. She carriedfirst-ever woman Prime Minister. She carried
out an extensive program of privatization. Theout an extensive program of privatization. The
new doctrine advocated reduction of taxes sonew doctrine advocated reduction of taxes so
as to stimulate investment and consumption.as to stimulate investment and consumption.

11. Recent HistoryRecent History
 Thatcher’s economic policy achievedThatcher’s economic policy achieved
remarkable success:remarkable success:
1) Inflation fell to about 4 percent.1) Inflation fell to about 4 percent.
2) Britain achieved an average 3 percent increase2) Britain achieved an average 3 percent increase
in its economic growth.in its economic growth.
3) The worker’s take-home pay increased by 203) The worker’s take-home pay increased by 20
percent.percent.
4) Profitability of industrial companies was high.4) Profitability of industrial companies was high.

12. Recent HistoryRecent History
 Thatcher’s policy was like a coin with twoThatcher’s policy was like a coin with two
sides:sides:
1) High Unemployment;1) High Unemployment;
2) Widened gap between the poor and the rich;2) Widened gap between the poor and the rich;
3) High crime rates;3) High crime rates;
4) Unsatisfactory social services.4) Unsatisfactory social services.

13. Recent HistoryRecent History IMFIMF
 The IMF (International Monetary Fund) is an
international organization of 185 member
countries.
 It was established to promote international
monetary cooperation, exchange stability, and
orderly exchange arrangements; to foster
economic growth and high levels of
employment; and to provide temporary
financial assistance to countries to help ease
balance of payments adjustment.

14. Recent HistoryRecent History IMFIMF
 Since the IMF was established its purposes
have remained unchanged but its operations—
which involve surveillance, financial
assistance, and technical assistance—have
developed to meet the changing needs of its
member countries in an evolving world
economy.

15. The Current U.K. EconomyThe Current U.K. Economy
 Division of the economic sectors:Division of the economic sectors:
 1. primary industry1. primary industry
 2. secondary industry2. secondary industry
 3. tertiary industries/service industry3. tertiary industries/service industry

16. Case Study: The AerospaceCase Study: The Aerospace
 Aerospace industryAerospace industry
 Large companiesLarge companies

17.  ““Big Four”Big Four”
 LloydsLloyds
 BarclaysBarclays
 MidlandMidland
 The National Westminster Bank GroupThe National Westminster Bank Group