Economy of Great Britain

Economy of Great Britain

   In spite of the fact that the population of Great Britain makes only 1 % of the population of globe, the United Kingdom takes 4th place in the world on trade. The mechanical engineering and transport, the industrial goods and chemicals are the basic articles of export of Great Britain. Since 70th years, oil recovery not only has allowed reducing import of oil products, but also has made essential profit in trade. British Petroleum is the largest industrial corporation of Great Britain and takes the second place in Europe.

    Britain carries out 10 % of world export of services — bank, insurance, broker, advisory, and also in the field of computer programming.

    Great Britain imports in 6 times more the industrial goods, than raw materials. The most considerable exporter of Great Britain are the USA. Seven of ten leading suppliers of the goods to Great Britain are the EU countries.

    Leading sector of the British economy is the sphere of services (74 % of gross national product), which rates of increase in 2010 years (3,6 %) exceeded rates of increase of gross national product in whole (2,8 %). In the lead position in it is occupied with its financial component (27,7 % of gross national product), defining country specialization in system of the international economic relations. On transport (7,8 % of gross national product) growth has made 2,9 %. The branch of the British economy second for the importance - the industry (18,6 % from gross national product, reduction of volume of output in 2006г. On 0,1 %) .On agriculture which satisfies an order of two thirds of internal requirements for foodstuff, it is necessary only 1 % of gross national product (the volume of output was reduced to 1,8 %), building (6,1 %, growth on 1,1 %). 
 
 
 
 
 

Natural resources 

    Coal fields: Jorkshirsky, Nortumberlendsko-Durham, South Welsh.

    Natural gas: Leman-bank, Brent, Morkem, Lokton, West-Sol, Hjuett, Indefatigably, Frigg, Vajking.

    Oil: Brent, Fortis, Statford, Kormorant, Najnian, Pajper, Fulmar, etc.

    Iron ore: Nortgemptonshirsky, Frodingemsky, Nortumberlendsko-Durham. 

Economic policy 

    The main components of the state economic policy of Great Britain directed on construction of steady economy and public welfare, have found the reflection in the basic financial plan of the country, the budget 2009.

   In the document the further social and economic problems which are put before itself by the government of Great Britain are defined, estimations and forecasts of national economic development and state financing, and also the governmental program of actions for achievement of the mentioned problems are presented.

    The considerable progress of the British economy noted last years, along with flexible state regulation has led to the general stabilization of national macroeconomic indicators, rather low rates of inflation and unemployment’s.

    The internal stability reached thanks to correct state economic policy, has helped the British economy to cope with the majority of the negative phenomena shown as a result of last world recession. For last three years in Great Britain only once following the results of a quarter outputs recession has been noted, and gross national product growth doesn't stop already more than 4 years (for the last half a century it is an original record).

    Prompt technological progress and rigid competition in the world markets create new realities for all branches of the British economy, and business continuously faces a survival problem. In these conditions the British government considers as indispensable attribute of national economic policy creation of flexible and dynamical labor markets, the goods and the capital, capable quickly and effectively to adapt for the changing conditions reflected in profitability and competitiveness of the enterprises (origin of the new markets and occurrence of new competitors, occurrence of more effective technologies and consumer demand transformation, a rise in prices for raw materials). 

State policy concerning joining to euro 

    In October, 1997 the decision to postpone acceptance of euro as the state monetary unit as consequences of such step weren't obvious to economy of Great Britain was accepted. The government has postponed the decision of this question for five years, simultaneously having set the task to prepare legal base for transition to euro provided that answers to following questions (so-called five criteria of the Ministry of Finance of Great Britain) will be clear:

   1. How much the state economy is close to economy of a zone of euro;

   2. Whether necessary flexibility of economy is provided to adapt for possible changes;

   3. As to euro transition will be reflected in an investment climate of Great Britain;

   4. As this decision will affect the market of financial services;

   5. As to euro transition will affect employment of the population of Great Britain.

    The relation of the government of Great Britain to transition to euro as the national currency, sounded by the Minister of Finance in its official report in Parliament in October 1997., is positive. The national economic interest estimated by a set from five above-named economic criteria should be the defining factor of such joining. According to conclusions following the results of last researches published in June 2010 with 1997. Great Britain has made essential progress in creation of conditions for the introduction into a euro zone. Nevertheless, despite evidence of the increased volumes of investments and trade, increase in volumes of financial services, employment and economy growth as a whole, the government has come to a conclusion that the national economy can't adequately react to the taking place negative phenomena in the European currency union as from five criteria the fourth is executed only, concerning the market of financial services. Therefore, considering both economic and political expediency of joining to euro, the government of Great Britain in the summer 2010. Has installed a complex of the further actions directed on creation of conditions for joining to euro. Last practical steps thereupon have been sounded by the Minister of Finance of Great Britain in its report to the House of Commons of the British parliament 9.06.04г.:

   • for measurement of rates of inflation with a view of budgetary planning to use a uniform indicator from EU – a consumer price index that will approach Great Britain to an euro area as regards estimations of a rate of inflation;

     • to prepare for discussion the bill of referendum carrying out on joining to uniform European currency;

   • to continue the reforms directed on perfection of the market of real estate and maintenance of macroeconomic stability; 

Banks and finance 

    Gold and exchange currency reserves (total) Great Britain as of the end of 2010

have made 84,0 billion dollars (the end of 2009 – 79,2 billion dollars), including governmental – 51,8 billion dollars (48,1 bln. dollars), Bank of England – 32,2 billion dollars (31,1 billion dollars).

    Fluctuations of an exchange rate of the British pound, taking place in 2010, in relation to the basic currencies considerably varied. If relative stability of a sterling rate in relation to the all-European currency reflects, first of all, synchronization of economic processes in Great Britain and the countries entering into a zone of euro, considerable strengthening in relation to dollar partly - preservation of the discount rate by Bank of England in high enough level, and partly – acceleration of rates of national economic growth. Dynamics of nominal (short-term) interest rates in Great Britain (4,4 % in the beginning of year to 5,1 % in the end of the year) exceeded a similar indicator in the USA in 2009(4,3 % in the beginning of year, 5,0 % in the end of the year) a little that has brought the contribution to strengthening of the British currency concerning dollar. 

Great Britain in system of the international economic relations 

    Great Britain (the population – less than 1 % from the world as a whole) keeps an important role in world economy. The country is included into the five of the most developed countries of the world and makes an order of 3 % (2007г. – 3,2 %) universal gross national product (at par purchasing capacity of national currency). And services its share is equal In export of goods of 4,6 % (2007г. – 5,2 %), in their import - 5,1 % (5,6 %). Reduction of relative density of the country in world trade Thus takes place. The macroeconomic situation in Great Britain last decade remained stable. Growth of real gross national product per capita on the average was above, than in other countries of "seven", unemployment and inflation - more low.

     In 2010 the gain of gross national product of Great Britain has raised to 2,8 % that corresponds to level of economic growth in "the seven" countries. Thus the rate of inflation in Great Britain was below (2,3 % against 2,5 %). About 2003/2004 fiscal years in Great Britain the situation with the size of deficiency of the state budget worsened, and in 2004/2005 financial year its size has reached 3,3 % of gross national product. However in 2006/2007 financial year this indicator has decreased to 2,8 % of gross national product. The country continues to keep a leading position in the world market of financial services. In Great Britain it is concentrated the three fifth world trade by the international bonds (1st place in the world, the primary market), two fifth - foreign actives (1st place) the little less than third of currency transactions (2nd place after the USA), is carried out the fifth part of the international loans (1st place).На Great Britain is necessary the two fifth world market of aviainsurance (1st place) and one fifth - sea insurance (2nd place). London also is in the lead in the field of management of actives of men of means of the world.

   In Great Britain the major are located commodity and world stock exchanges: the London stock exchange, the London stock exchange of metals, the International oil stock exchange, the Baltic stock exchange (trade in sea-crafts).

    Great Britain - a member of the United Nations, a constant member of its Security council (the general payments of the country in the area of the United Nations are equal 0,4 bln. dollars), the NATO, "eights", British Commonwealth (voluntary association of Great Britain and other 53 states which in the past were under control of Great Britain), the Organizations for safety and cooperation in Europe. Great Britain - one of leading members of the European union (has entered in 1973г.) . Great Britain is a member of the Organization of economic cooperation and development, the World Trade Organization, the International currency fund and the World Bank, and also of some regional banks of reconstruction and development (African, European, the countries of Caribbean basin, Latin American, Asian), the European investment bank, the Parisian and London clubs-creditors. She plays a key role in acceptance of various collective decisions within the limits of these international economic and financial organizations and agreements. Great Britain actively participates in activity of Group of working out of financial measures of struggle against money-laundering (Financial Action Task Force on Money Laundering - “FATF”), “G20” or “Egmont Group of Financial Intelligence Units”, the numbering 58 states-participants.

   Giving great value to struggle against climate changes, the British government has developed measures on preservation of the environment which assume: - support of working out of alternative energy sources, and also realization of measures on recycling of harmful emissions; - development of power saving up technologies, including by scheme introduction «Green Landlord Scheme» and fund creation «Carbon Trust» for the purpose of granting of interest-free credits to the national companies for introduction of the specified technologies; - granting of privileges to the enterprises introducing technologies, based on "pure" fuel.

   The conclusion 

   Great Britain — the advanced industrial country.

   London is one of the largest world trading and financial centers. Great Britain possesses considerable power resources (coal, natural gas, oil), has one of the highest indicators for industrially developed countries on energy manufacture.

   Among the most developed industries: aircraft construction, motor industry, shipbuilding, iron and steel industry, coal, oil, chemical, pulp-and-paper, food, textile.

   The agriculture, in which 1 % of able-bodied population is occupied all nearby, differs high level of mechanization and makes about 60 % of the foodstuffs necessary for requirements of the country.

   Monetary unit - pound sterling (1 pound sterling is equal to 100 pence). The main trading partners: Germany, France, the Netherlands, the USA.

   The main ports of the country are Dover, Liverpool, London, Southampton, Felikstou, Hartlepool. 
 
 
 
 
 
 
 
 
 
 
 
 
 

The list of the used literature:

1. Bussing-Burks, Marie (2003), Influential Economists, Minneapolis: The Oliver Press, ISBN 1-881508-72-2.
2. Rae, John (1895), Life of Adam Smith, New York City: Macmillan Publishers, ISBN 0722226586.