Economy

Great Britain is one of the world's major economic powers, with an economy based mainly on manufacturing, foreign trade, and a wide range of international business and commercial activities, such as banking and insurance. Measured by its total gross domestic product (GDP), Britain ranks among the top 10 industrial countries of the world.

Britain was the home of the Industrial Revolution and for many years was the world's richest and most industrialized nation. In the 20th century, however, British trade and manufacturing lost the supremacy that once enabled Britain to be called the “workshop of the world.” Among the causes were competition from developing countries, the worldwide depression of the 1930's, the high cost of two world wars, increasing obsolescence of factories and equipment, and the loss of a far-flung empire.

Economic growth since World War II has been slower than in most of the other countries of western Europe. Among the reasons have been a declining value of the nation's currency, the pound sterling; strong conflicts between labor and management; lagging productivity; inflation; sharply rising import prices; and large foreign trade deficits.

Large-scale exploitation of huge petroleum deposits in Britain's part of the North Sea, which began in 1974, has greatly aided the economy. Modernization programs in key industries, such as iron and steel and coal, and membership in the European Union have contributed to Britain's long-term economic improvement.

Most of Britain's economy is based on private enterprise. Among the industries that are government-owned are coal mining and nuclear power.

Since the mid-1960's Britain's service industries have enjoyed exceptional growth, and by the early 1990's they accounted for about 65 per cent of the nation's GDP and a slightly larger percentage of Britain's overall employment. Financial services (including banking, insurance, and investment services) together with business services (including advertising, market research, and computing services) are the leading service industries. London is a major world center for banking and insurance. It also has one of the world's largest stock exchanges.

Britain's manufacturing industries have declined since the mid-1960's, when they provided nearly a third of all jobs. In the early 1990's manufacturing accounted for about a fifth of the nation's workforce.

Historically, British manufacturing has been dominated by industries producing such items as textiles, motor vehicles, industrial machinery, and iron and steel. Although these industries remain important, manufacturing in Britain underwent a shift in emphasis during the 1970's and 1980's and is now dominated by high-technology industries such as those producing optical fibers, communication and navigation equipment, computers, electrical instruments, and aviation equipment. Other important manufacturing industries include those producing chemicals, plastics, processed foods, pharmaceuticals, and printed materials. Britain is also known for some of its specialty products, including glassware, china, and whisky.

Many of Britain's high-technology industries are located in the southern and southwestern parts of the country. Production facilities in these areas are generally modern and highly efficient. Britain's older industries are located mainly in the northern, central, and western parts of the country. Many factories in these areas are obsolete and inefficient. The government provides aid to these areas for the modernization of factories and for the development of new industries.

Although it engages only about 2 per cent of the labor force and accounts for a slightly smaller percentage of the GDP, British agriculture supplies more than half of the country's food needs. About 80 per cent of Britain's total area is used for agriculture, which in general is highly mechanized and technically advanced. Britain pioneered improved farming methods as early as the 18th century.

Britain's damp climate and hilly terrain make much of the country well suited to hay production and grazing. Consequently, livestock and livestock products, especially meat and milk, account for most of the farm income. Except for poultry, sheep and cattle are the most numerous farm animals. Many of the world's finest breeds of livestock were developed in Britain.

Most of the cropland is in the south and the east, where the terrain and soils are better suited to tillage than elsewhere. Cereals, particularly barley and wheat, sugar beets, rapeseed, and potatoes are the chief field crops. Also produced in large amounts are vegetables, especially cabbages and carrots. Apples are the most widely grown and abundantly produced fruit.

A long coastline and easy access to the sea have helped make Britain a prominent fishing nation. Fleets from hundreds of coastal cities and towns fish the adjacent waters, especially the North Sea, which is one of the most productive fishing grounds in the world. In addition, large trawlers and freezer-factory ships voyage to distant North Atlantic waters.

Seafood has long been a popular food in Britain and an important part of the nation's food supply. Cod, haddock, plaice, herring, mackerel, whiting, and shellfish make up most of the catch. Fish farming of salmon and rainbow trout is also important. Among the busiest fishing ports are Brixham, Grimsby, Newlyn, North Shields, and Lowestoft in England; Milford Haven in Wales; and Aberdeen in Scotland.

Only about 10 per cent of the land is forested, and Britain relies on imports for most of its wood and wood products. A reforestation program is bringing additional forest land into production.

Abundant coal and rich iron-ore deposits provided the foundation for the iron and steel industry and aided Britain in its early industrialization. The iron ore is now largely depleted, and what remains is mostly of low grade, making large imports necessary. Coal, however, remains an abundant and valuable resource and is a major energy source in Britain. Many of the old collieries (coal mines) have been either closed or modernized since the industry was nationalized in 1947, and large new ones have been opened.

Large-scale natural gas production from the floor of the North Sea began in 1967 and was followed by a petroleum boom, which began in 1974. Previously, Britain was almost totally dependent on imports for these fuels. The total reserves of Britain's North Sea oil and gas are enormous.

The rest of the nation's mineral production, in terms of value, consists largely of stone, sand, and gravel for construction purposes; clays for pottery and ceramics; and tin. Potash, salt, and small amounts of non-ferrous metal ores (in addition to tin) are also produced.

Britain has well-developed land, sea, and air transportation systems. The railway system, called British Rail, offers freight and passenger service throughout Britain. Some of the best rail service in Europe is provided by high-speed passenger trains between London and certain of the other major cities. The Channel Tunnel (completed in 1994) provides a rail link between Folkestone, England, and Calais, France.

Vastly increased motor vehicle traffic has accompanied a nationwide road-building program, begun in 1955. Especially notable are the high-speed limited-access highways called motorways. Road transport accounts for the largest share of passenger and freight traffic in Britain.

Great Britain has long been a leading maritime nation. Its merchant marine is one of the largest in the world. Of several hundred ports, London's is the largest and busiest. Other major ports include those in or near Hull, Liverpool, Manchester, Bristol, and Southampton, all of which handle a wide range of cargo. Elsewhere, there are large specialized ports for bulk cargo, such as petroleum, coal, and ore. Dover is the chief port for English Channel crossings.

Virtually all of Britain's canals are old and small and have no commercial significance. Probably the busiest waterway is the Manchester Ship Canal, which links Manchester to the Mersey estuary and the sea.

Air service is provided by British Airways, which flies domestic and international routes, and by several other privately owned airlines. Heathrow Airport, near London, is the world's busiest international terminal.

With insufficient food production and few raw materials, Britain is heavily dependent on international trade. The greatest trading bloc consists of the countries of Western Europe, which account for more than half of Britain's foreign trade. The bulk of it is with other members of the European Union, especially Germany, France, and the Netherlands. Britain's largest single trading partner is Germany.

There is also considerable trade with the United States and with members of the Commonwealth of Nations, especially Canada and Australia.

Britain normally imports much more than it exports, by value, and runs a large trade deficit. This is usually offset by so-called invisibles, which include receipts from tourism, overseas banking and insurance, and international shipping and aviation.

Great Britain's tourist industry is one of the largest in Europe. The main attractions are London, the beauty of the countryside, and the country's many historic places.

British Telecom, a stockholder-owned corporation, provides telephone and other telecommunication services. Television broadcasting is provided by the British Broadcasting Corporation (BBC) and several independent television stations. The BBC is owned and managed by the government, and the independent stations are regulated by the government through the Independent Television Commission (ITC). There are also a number of satellite broadcasters. Most radio broadcasting originates from the BBC, which broadcasts programs do mestically and overseas. There are also several independent radio stations, which are regulated by the government through the Radio Authority (RA).

On a per capita basis Britain ranks among the world's foremost publishers of books, newspapers, and periodicals.