Some facts about the UK economy.
- In 2018, UK GDP stood at $2,809 trillion (£2,217)
- According to IMF, the UK GDP ranked 5th in nominal terms. Behind Germany (4th) and ahead of India (6th)
- Measured according to Purchasing Power Parity (adjusted for living costs, the UK ranked 9th
- The Great Moderation. Between 1993 and 2007, the UK experienced 63 consecutive quarters of economic growth – it was the longest unbroken period of economic growth on record.
- The Great Moderation was followed by the recession of 2008/09, – a steeper decline in GDP than the Great Depression.
In the 1920s, over 1.2 million men were employed in the coal mines. By 2017, that number was below 5,000
Nearly 5 million workers are now classed as ‘self-employed’ a 45% rise since 2000. (Gig Economy)
- The manufacturing sector has declined from 35% of GDP in 1970 to 12% in 2008.
- The service sector now accounts for 80% of the UK economy
- Unemployment in the UK was highest during the Great Depression of the 1930s at over 22% of the workforce. This was also was in a period of minimal welfare support from the government.
- The largest category of UK production is mineral oils and fuels 16%, nuclear reactors/parts is 2nd at 14%. The third largest is cars at 10%
- Although mostly foreign-owned, the UK car industry is a major exporter. UK factories built 1.46 million cars in 2012
- 48% of UK exports go to the EU
- 53% of UK imports come from the EU. Germany is our biggest import source, followed by Spain.
National debt as a % of GDP reached a peak in the early 1950s at over 240% of GDP
British national debt originated during the reign of William III – when the king asked a few bankers to help buy government debt.
In 1694, The Bank of England Act was founded by Royal Charter. One of their primary objectives was to manage the issuance and sale of government debt. Since 1694, the government has never defaulted (though inflation has sometimes reduced its real value)
In 2018, UK national debt stood at £1,792.3 billion equivalent to 85.2% of GDP.
In 1976, the UK was ‘forced’ to borrow $3.9 billion from the IMF due to balance of payments crisis. (IMF Crisis)
The interest payment on this debt was £68bn or 3.5% of GDP.
- The highest rates of inflation in the post-war period was 25% in 1975. This inflation was due to the oil crisis – rising oil prices and rising wages.
- At the end of the First World War, there was also a brief period of high inflation – but this was followed by a period of deflation (falling prices)
- The UK’s highest rate of inflation on record was in 1800 (during the Napoleonic Wars) where inflation was estimated at 36.5%. See history of inflation
UK interest rates
In 1980, UK interest rates reached 17%. Between 2009 and 2018, interest rates were at a historical low of 0.5% or less. Historical interest rates
In 1992, the government temporarily increased interest rates to 15% in a bid to keep the value of the Pound high in the Exchange Rate Mechanism. However, investors didn’t believe interest rates were sustainable. Investors like George Soros kept selling Pounds to the government and made billions when the UK was forced to leave the ERM in September 1992
- The UK introduced a minimum wage of £3.60 in 1999. In 2018, the minimum wage is now £7.83 (for workers over 25)
- In 1909, Liberal chancellor Winston Churchill set up ‘Trade councils‘ for industries with notoriously low pay. These wage councils set wages for these particular industries. These trade councils were superseded by ‘wage councils in 1945. These wage councils were abolished in1993 for 2.5 million low paid workers.
- In the mid-1860s workers in London received the following wages for a 10-hour day and six-day week:
- Common labourers 3s. 9d.
- Excavators wearing their own “long water boots” 4s. 6d.
- Bricklayers, carpenters, masons, smiths 6s. 6d.
- Between 1850 and 1902, UK real wages grew 80% (history of wages)
- In 1940 about 33% of household income was spent on food. In 2017, this is about 12%.
- In the 1940s rural households relied on gardens and allotments to provide more than 92% of their fruit and vegetables in winter and 98% in summer. (ONS)