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The Economy of the UK: An Overview
- The services sector, in particular banking and insurance, is the UK’s strongest sector. Especially the Greater London area is a financial hub with many working opportunities for expats.
- The UK is the world’s eleventh biggest manufacturing nation, with the civil and military aerospace and the pharmaceutical industry of particular importance.
- The south of England as well as the Greater London area are the motor of the UK economy.
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. Moreover, the pro-Brexit vote in June 2016 has created uncertainty regarding its impact on the British economy: it is still growing, although not as fast as originally predicted.
The UK’s Strong Service Sector
The economy of the UK today is overwhelmingly fueled by the strength of its services sector, which accounts for some 79% 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 20th on the 2016 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.
Still Important to the Economy: Industry and Agriculture
Despite the decline in the past years, the manufacturing sector still plays an important role in the UK’s economy and manages to contribute 21% to the GDP. The UK is the world’s eleventh biggest manufacturing nation and 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.
With less than 1% agriculture may be the least important sector in terms of GDP contribution, but it is still of vital importance for Britain and Northern Ireland. 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 in the past decade had some particularly devastating effects on the economy of the UK, mainly due to the importance of the financial sector for the local GDP. The economy of the UK is still not back to pre-crisis levels and growth rates have been very low in the years since, reaching only 0.5% positive growth in 2015.
Regional Disparities throughout the Kingdom
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 expat destinations, 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 their geographical and demographic size. 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 still 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.
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