The United Kingdom has the seventh-largest economy in the world, has the second-largest economy in the European Union, and is a major international trading power. A highly developed, diversified, market-based economy with extensive social welfare services provides most residents with a high standard of living.
The UK joined the European Economic Community (now known as the EU) in January 1973 and it is a founder member of the World Trade Organization. The United Kingdom is one of the world’s leading advanced economies. And it is the second biggest exporter of services in the global economy and ranked eighth in global exports of goods.
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The Labor government has continued the privatization policy of its Conservative predecessor, particularly by encouraging "public-private partnerships" (partial privatization) in such areas as the London Underground.
There have been two recessions in the last twenty-five years in UK. The early 1980s downturn was a deep recession – the worst downturn in the UK’s post-war history. We can see the descent into recession in 1990 and 1991 and then a recovery which was maintained throughout the remainder of the 1990s. Further positive rates of growth have been sustained in the first six years of the current decade, allowing the UK economy to claim one of the longest periods of expansion in our modern history. After a slowdown in 2005 the British economy looked to be enjoying stronger growth in the first half of 2006.
From 1989 until 2010, the average inflation rate in United Kingdom was 2.72 percent reaching an historical high of 8.50 percent in April of 1991 and a record low of 0.50 percent in May of 2000. From 1971 until 2010 the United Kingdom's Unemployment Rate averaged 7.22 percent reaching an historical high of 11.90 percent in April of 1984 and a record low of 3.40 percent in December of 1973.
As a leading international financial center, London’s financial exports contribute greatly to the United Kingdom’s gross domestic product and will continue to do so. And the service industries account for 75 percent of the U.K.'s economic output, according to the CIA. Industry accounts for 23.8 percent of output while agriculture represents 1.2 percent. 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.
The first problem of the economy of UK is that it has a high national debt. The UK national debt is the total amount of money the British government owes to the private sector and other purchasers of UK gilts. And the cost of National debt is the interest the government has to pay on the bonds and gilts it sells. UK public sector net debt in March 2012 was £1022.5 billion, equivalent to 66.0 per cent of GDP – (note this excludes financial sector intervention.) If all financial sector intervention is included (e.g. Royal Bank of Scotland, Lloyds), the Net debt was £2311.6 billion (147.3 per cent of GDP). This is known as the unadjusted measure of public sector net debt.
After a period of financial restraint, National debt fell to 29% of GDP by 2002. Then, national debt increased from 30% in 2002 to 37 % in 2007. This was despite the long period of economic expansion; it was primarily due to the government’s decision to increase spending on health and education. There has also been a marked rise in social security spending. Since 2008, National Debt has increased sharply because of three reasons. The first, economics recession (lower tax receipts, higher spending on unemployment benefits) the recession particularly hit stamp...