Economy: The Industrial Revolution, a 20th Century Affair
God Bless sheep. They give us cute lambs to look at, they keep the Welsh happy and in medieval times until the Industrial Revolution wool was the biggest transport coming from the British Isles.
The sheep weren’t doing a baaaa-d job, because in the 18th and 19th Centuries the UK boasted the largest, most flourishing economy in the whole world. A quick surge of technological advances in agriculture, textiles and transport meant that UK productivity went from sufficient to surplus. This era was known as the Industrial Revolution; a time when the economy expanded rapidly and the UK enjoyed great trade success across the globe.
The Revolution resulted in persistent prosperity and in order to maintain and manage the economic growth there was a divergence from manufacturing and hard labour as the predominant source of income and an evolution into the beginning of finance and enterprise leading up till the 20th Century.
Economy: 1900 – WWII
From the beginning of the 20th Century to World War I in 1914-1918 the UK had a slow rise in economic growth compared to other countries, due to lack of natural resources. After suffering losses estimated at 25% as a consequence of the war, the UK struggled to recover, creating fertile ground for the Great Depression in 1929. The economy began to recover in 1933 but only very slowly.
World War II began in 1939 and the UK turned its attention to manufacturing armaments and did this on a grand scale. However, when the war ended in 1945, the economy had to re-adjust itself from one whose trade had pivoted around war.
Economy: Post WWII – 2000s
Post-war, the economy enjoyed a steady rate of growth, but this was often criticized in comparison to other European countries and the USA who were growing faster and steadier. In 1973 the economy experienced a recession which arguably lead to the election of the Conservative government by 1979, making Margaret Thatcher the UK’s first female Prime Minister.
Thatcherism was one of two recent changes that the economy underwent that were a result of different political powers. Firstly, Margaret Thatcher and the Conservative government gained political power in 1979 and the economy saw major changes, which were variously criticized and acclaimed. Thatcher imposed privatization of many sectors and higher taxes. The short-term result of this was three million people unemployed, but ultimately there was a growth until the recession of the early 1990s. Even now many UK citizens are divided in opinion about the actions of the Thatcher government.
Secondly, was the election of Tony Blair and the Labour government. Blair, as leader of the Labour party, succeeded John Major and the Conservatives in the 1997 General Election. Under the Labour government there were 40 successive quarters of economic growth, until the recent economic downturn of the late-2000s.
Economy: Recent downturn
Like many other nations, the UK was subject to the economic downturn of the late-2000s. The decline in the economy lasted a period of six consecutive quarters of negative growth, beginning in the second quarter of 2008 and ending in the fourth quarter of 2009, records the Office for National Statistics (ONS). Other major economies such as Japan, France, USA and Germany all returned to growth in Q2 of 2009, making the UK the last major economy in the world to leave recession.
In December 2016, the ONS revised figures for the third quarter of 2016 which showed a deceleration in recession; the economy had shrunk by 0.2%, compared to a 0.6% fall the previous quarter. Overall the economy had shrunk by 4.9%, making the 2008-2009 recession the longest since records began. This led to a shrinking of lending by banks and a proliferation of alternative lenders capitalising. The financial tide began to change though and after recording a growth of 0.4% in Q1 of 2017, the economy experienced an accelerated growth of 1.2% in Q2, the fastest rate of growth in 9 years. However, in late 2017 the UK experienced the coldest December on record.
As a result of this, the economy shrunk again, this time by 0.5% in the final quarter of 2017. As we are now past Q1 of 2018, financial data for this time is likely to be analysed in concordance with The Budget 2018, the first Conservative government Budget since the mid-1990s.
As of April 2018:
- The currency is Pounds Sterling (£).
- The UK economy is the 6th largest economy in the world, measured by gross domestic product (GDP) and purchasing power parity (PPP).
- The UK GDP (chained volume measure) is £329 billion.
- The unemployment rate for Nov-Jan 11 is 8%. Number of people claiming Jobseekers Allowance is 1,448,000. The number of job vacancies is 496,000.
- The UK is a member of the Commonwealth of Nations, the European Union, 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 and the United Nations.
The spending of the UK government’s money is determined by The Budget. The Budget is decided annually and the speech given about the changes is made by The Chancellor of the Exchequer – currently this is Phillip Hammond. In the months after the Budget information is released, a pre-Budget report is made, commenting on the progress of the economy and proposed new taxes.
When a new Budget is announced the Chancellor gives a speech outlining the changes and the expected outcomes of the decisions made. The iconic image for the Budget change is the Chancellor photographed outside Number 11 Downing Street holding a small red leather briefcase known as the Budget Box.
The UK’s economic growth is set to be slower for 2018 before accelerating in subsequent years. With mixed political messages following the recent budget, the forecast is uncertain. Following the UK Budget 2018, released 23rd March, the Office for Budget Responsibility forecasts the UK economy to grow by 1.7%. If all goes to plan, other predictions made include:
- Unemployment figures set to drop.
- Government borrowing less than expected 2018 but will rise in subsequent years.
- Fuel cut by 1p but VAT on fuel not reduced.
- Inflation set between 4% and 5% 2018 and due to fall to 2.5% in 2012.
- Forecast borrowing of £146bn this year, £2.5bn lower than anticipated.
- Borrowing to fall to £122bn next year, dropping to £29bn by 2015-16.
- National debt forecast to be 60% of national income this year, rising to 71% in 2012 before falling to 69% by 2015.
Help for businesses include:
- Corporation tax to be cut by 2% in April, not 1% as previously planned.
- Tax to cut by 1% in each of the next three years, reducing it to 23%.
- Bank levy to be adjusted so banks do not pay less tax as a result.
- 43 tax reliefs to be scrapped as part of simplification of tax code.
- No new regulation on firms with fewer than 10 staff for three years .
- Business rate relief holiday for small firms extended for another year.
- New rules to require planners to prioritise growth and jobs.
- £100m funding for science facilities.
- 21 “enterprise zones” to be created in England, backed by tax incentives.
- Reform of gift aid administration for charitable donations.
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