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Economic System of the United Kingdom

Updated March 23, 2017

The United Kingdom operates a diversified economy that is one of the largest in the world. The British economic system exhibits the characteristics of a mixed system, combining market-based features with some socialist characteristics.

Size

The CIA World Factbook reported that the United Kingdom's economy had a total gross domestic product (GDP) of nearly £1.4 trillion in 2009, making it the world's seventh largest.

Features

Service industries account for 75 per cent of the U.K.'s economic output, according to the CIA. Industry accounts for 23.8 per cent of output while agriculture represents 1.2 per cent. Overall, the United Kingdom's mixed economy has mostly free market features but retains some socialist characteristics, such as the government owning a stake in some industries.

Significance

The British capital, London, is an important centre of world financial activity. It is home to the London Stock Exchange, founded in 1801 and one of the world's largest stock exchanges. In addition, more than 100 of Europe's largest companies have their headquarters in London.

History

Since the 1980s, under Prime Minister Margaret Thatcher, the British government privatised many industries, including British Rail, British Petroleum and British Airways.

Considerations

The world economic crisis of 2008 pushed the British economy into a recession, leading to a series of stimulus and reform measures by the government, including nationalisation of part of the country's banking industry.

Identification

The pound is the basic unit of currency in the U.K., which chose not to adopt the common European currency, the euro. The 2008 economic crisis and the pound's decline against the euro has had little effect on public opinion, which remained against joining the euro, in a survey conducted in Dec. 2008.

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About the Author

Shane Hall is a writer and research analyst with more than 20 years of experience. His work has appeared in "Brookings Papers on Education Policy," "Population and Development" and various Texas newspapers. Hall has a Doctor of Philosophy in political economy and is a former college instructor of economics and political science.