United Kingdom economy

The economy of the United Kingdom is the fifth-largest national economy in the world
measured by nominal gross domestic product (GDP) and ninth-largest in the world measured
by purchasing power parity (PPP), comprising 4% of world GDP. It is the second-largest in
the European Union by both metrics. The UK has been the fastest growing economy in the
Group of Seven (G7) for four consecutive years, with 2.2% year-on-year growth in the
second quarter (Q2) of 2016.

In 2015 the UK was the eleventh-largest exporter in the world and the sixth-largest importer,
and had the second-largest stock of inward foreign direct investment and the second-largest
stock of outward foreign direct investment. The UK is one of the world's most globalised
economies and is composed of (in descending order of size) the economies of England,
Scotland, Wales and Northern Ireland.

The service sector dominates the UK economy, contributing around 78% of GDP; the
financial services industry is particularly important, and London is the world's largest
financial centre. Britain's aerospace industry is the second- or third-largest national aerospace
industry depending on the method of measurement. Its pharmaceutical industry plays an
important role in the economy and the UK has the third-highest share of global
pharmaceutical research and development. The automotive industry is also a major employer
and exporter. The British economy is boosted by North Sea oil and gas production; its
reserves were estimated at 2.9 billion barrels in 2015. There are significant regional variations
in prosperity, with South East England and southern Scotland being the richest areas per
capita. The size of London's economy makes it the largest city by GDP in Europe.

In the 18th century the UK was the first country to industrialise and during the 19th century it
had a dominant role in the global economy. From the late 19th century the Second Industrial
Revolution was also taking place rapidly in the United States and the German Empire; this
presented an increasing economic challenge for the UK. The costs of fighting World War I
and World War II further weakened the UK's relative position. In the 21st century, however, it
remains a great power with global strengths and an influential role in the world economy.

In 2008, the UK entered the Great Recession during the financial crisis of 200708, its first
for nearly two decades and its longest and deepest recession since World War II. Since 2013,
the UK has been in a nascent economic recovery and is firmly in expansion territory. The
economy is now (Q1 2016) 7.7% bigger than its pre-crisis peak and 14.8% bigger than its
lowest point in 2009. However, the UK's current account deficit is the highest since records
began and the highest by GDP in the developed world.

Government involvement in the British economy is primarily exercised by Her Majesty's

Treasury, headed by the Chancellor of the Exchequer, and the Department for Business,
Innovation and Skills. Since 1979 management of the economy has followed a broadly
laissez-faire approach. The Bank of England is the UK's central bank and its Monetary Policy
Committee is responsible for setting interest rates.

The currency of the UK is the pound sterling, which is also the world's third-largest reserve
currency after the United States dollar and the euro and also one of the ten most-valued
currencies in the world.

The UK is a member of the Commonwealth of Nations, the European Union (although it has
voted to leave), the G7, the G8, the G20, the International Monetary Fund, the Organisation
for Economic Co-operation and Development, the World Bank, the World Trade
Organisation, Asian Infrastructure Investment Bank and the United Nations.

United Kingdom Economy Data

2011 2012 2013 2014 2015

Population (million) 63.3 63.7 64.1 64.5 64.9

GDP per capita (USD) 41,049 41,436 42,366 46,412 43,890

GDP (USD bn) 2,598 2,640 2,715 2,994 2,850

Economic Growth (GDP, annual variation in %) 2.0 1.2 2.2 2.9 2.3

Domestic Demand (annual variation in %) -0.2 2.1 2.4 3.4 2.3

Consumption (annual variation in %) 0.1 1.8 1.9 2.5 2.7

Investment (annual variation in %) 2.0 1.5 2.6 7.3 4.1

Exports (G&S, annual variation in %) 5.8 0.7 1.2 1.2 5.1

 2011 2012 2013 2014 2015

Imports (G&S, annual variation in %) 0.6 2.9 2.8 2.4 6.3

Industrial Production (annual variation in %) -0.6 -2.8 -0.8 1.3 1.0

Retail Sales (annual variation in %) 0.0 0.6 1.4 4.0 4.5

Unemployment Rate 8.1 8.0 7.6 6.2 5.4

Fiscal Balance (% of GDP) -7.7 -8.3 -5.6 -5.6 -4.4

Public Debt (% of GDP) 81.8 85.3 86.2 88.2 89.2

Money (annual variation in %) 3.0 5.5 5.4 6.2 5.9

Inflation Rate (CPI, annual variation in %, eop) 4.2 2.7 2.0 0.5 0.2

Inflation Rate (CPI, annual variation in %) 4.5 2.8 2.6 1.5 0.0

Inflation (PPI, annual variation in %) 4.7 2.1 1.3 0.0 -1.7

Policy Interest Rate (%) 0.50 0.50 0.50 0.50 0.50

Stock Market (annual variation in %) -5.6 5.8 14.4 -2.7 -4.9

Exchange Rate (vs USD) 1.55 1.63 1.66 1.56 1.47

Exchange Rate (vs USD, aop) 1.60 1.59 1.56 1.65 1.53

Current Account (% of GDP) -1.7 -3.3 -4.5 -5.1 -5.2

Current Account Balance (GBP bn) -27.4 -54.7 -77.9 -92.5 -96.2

Trade Balance (GBP billion) -93.5 -106.5 -115.2 -123.1 -125.4

 2011 2012 2013 2014 2015

International Reserves (USD) 79.3 88.6 92.4 95.7 119

Source : Bloomberg