Economy & Finance
The Economy of the UK: An Overview
The economy of the UK was hit hard by the global financial crisis at the end of the past decade. Only through many different attempts at stimulating the economy while cutting down on public expenditures and raising taxes was it possible for the UK to get back to a stabilized, albeit weakened, economy.
The Economy of the UK: Sectors
As is the case in all modern, first-world societies, the economy of the UK today is overwhelmingly fueled by the strength of its services sector, which accounts for some 78% of the total GDP. The most significant services are banking, insurance, and business services. Many of the biggest names in this sector in the UK are household names worldwide – think HSBC, for example.
Chances are that as an expat entering the economy of the UK, you will also find employment in this sector – maybe even in the same company you’ve worked for back in your home country. The UK is among the most globalized places in the world, ranking twelfth on the 2013 KOF Index of Globalization. One region is of particular importance in this regard: the Greater London area (where most expatriates end up working) is home to the European and worldwide headquarters, as well as branch offices, of dozens of multinationals, earning its rightful place among Tokyo and New York as one of the main centers of the global economy and finance.
Industry and Agriculture
The manufacturing sector, once the pride of the UK, today only manages to contribute 21%. However, some of the industries located or headquartered in the UK are of major importance on a global scale, particularly the civil and military aerospace industry (BAE Systems, Rolls Royce) and pharmaceuticals (GlaxoSmithKline, AstraZeneca). Furthermore, the automotive and construction industries are among the largest employers of UK residents, employing nearly five million people between them. Mining also contributes its share to the economy of the UK. The nation’s coal, gas, and oil reserves are of great importance, but declining in quantity – the UK has had to rely on energy imports since around the middle of the past decade.
Agriculture may be the least important sector in terms of GDP contribution, but it is still of vital importance for Britain and Northern Ireland, if not for the economy of the UK. As agriculture is not only highly mechanized and intensive, but also very effective, the men and women working in the primary sector are able to produce enough to meet about 60% of the food demand of the entire nation.
The global crisis of 2008/09 had some particularly devastating effects on the economy of the UK, mainly due to the importance of the financial sector for the local GDP. While various measures aimed at stimulating the economy of the UK and stabilizing the financial markets, e.g. increasing public spending and implementing temporary tax cuts, as well as a five-year austerity program launched in 2010, canceled out the worst effects of the recession, the economy of the UK is still not back to pre-crisis levels. Growth rates have been very low in the years since, reaching only 0.2% positive growth in 2012.
As we have hinted at above, the southern part of England, and Greater London in particular, is the biggest motor for the economy of the UK, and probably the region where a great part of all expats opting for the UK choose to make their home. Unsurprisingly, this is also the priciest region to live in. The northern part of England has overcome much of the negative reputation it held after the decline of the local industry sector by diversifying its economy considerably.
Scotland’s main attractions for expats, Glasgow and Edinburgh, both profit from their modern, service-based economies. The GVA per capita of Scotland is slightly below UK average; however, if oil and gas revenues are included (the nation is the EU’s largest oil producer), Scotland only trails Greater London in this regard. The economies of Northern Ireland and Wales are both similarly small, mainly due to the geographical and demographic size of both countries. The former also has had to cope with the internal struggles during the Troubles, which have had negative effects on the economy noticeable even today. However, interested expats might be able to find attractive job openings in Belfast or Cardiff.
For detailed information on how to enter the economy of the UK as an expat working in Britain or Northern Ireland, please refer to our articles on getting a work permit for the UK and looking for jobs in the UK.