Changing UK Economy

Changing UK Economy

1. Causes of economic change in the UK

   • Globalisation
     • Describes the way in which the world has become more interconnected
     • Led to an increase in world trade, foreign investment, communication between different countries and the sharing of ideas
     • In past, UK economy based on activities that took place within country and within commonwealth
     • The growth of globalisation meant that the UK economy now more dependable on other countries
     • 1900s, 55% UK population worked in secondary jobs - 2011 census showed 9%
   • Government policies
     • Government manages the UK economy through the Treasury
     • 1980s, UK performing better than most other European countries
       • Many state-owned businesses in UK were privatised
       • Markets deregulated
       • Lots of factories and coal pits were closed
       • Service sector grew
     • Continued to grow through 1990s
     • 2008, there was a global financial crisis and the UK entered period of recession
     • Since 2010, a programme of austerity has been in place
   • Deindustrialisation
     • Has been a decrease in the amount of manufacturing taking place in the country in the tertiary and quaternary sectors
     • Traditional industries have declined
       • A global shift in manufacturing to NEEs, where wages are lower, working hours longer and trade unions sometimes banned
       • An increase in number of machines used to carry out work (mechanisation)

2. Moving towards a post-industrial era

   • Development of IT
     • Worth £58 billion a year
     • Around 100,000 software companies operate in UK
     • UK has the largest mobile device market in Europe
     • Cloud-based storage systems are fast-growing part of UK economy
     • Many UK companies looking to locate data centres closer to home so this is a growth area
     • UK's cyber security market grown, due to increased threats
   • Growth of service industries
     • Service sector makes up about 3/4 UK's economy
     • Can include range of jobs
     • People from other countries travel to UK for these services and money generated from this counts towards UK exports
     • UK is the second largest exporter of services globally
   • Finance and research
     • Large financial employes in the UK
     • Government believes science and research are important for UK's growth
     • Science and research take place through government research councils and other organisations
   • Science and business parks
     • Are special places for company offices
     • Often found on edge of cities where there is good accessibility
     • Many located close to universities to attract graduates
     • Science and business parks are designed to be pleasant environments for people to work in
     • Often low-rise, with plenty of parking and green spaces

3. Developing more sustainable industry

   • London sustainable industries park is located on the Thames Gateway to the east of the city
   • Built on the site of the farmer Dagenham Ford car factory and it provides space for nine different businesses
   • Park is well-connected by the underground network, the national rail network, the M25 motorway and City airport
   • Three initial organisations located in the park work on recycling, researching sustainability issues and using food waste to generate biogas
   • Aim is that they will all work with each other through closed loop system
   • Government have invested money into this park because they believe this a good model for future of industry in UK

4. New developments in infrastructure

   • Roads
     • The highways agency responsible for any new major roads in UK
     • Part of the government and collect money through Vehicle Excise Duty
     • Smaller roads managed by local councils
     • Highways agency have ongoing programme of resurfacing roads and building new roads
     • 2014, government announced £15 billion spent on improving and expanding UK roads
     • Involves building smart motorways that use technology to manage congestion
   • Rail network
     • Responsible for running, maintaining and developing Britain's railways
     • Number of rail journeys made have doubled over last twenty years
     • £25 billion being spent to upgrade network by 2019
     • HS2 planned fast train link between London and North of England
     • HS2 planned to be completed in 2026, with estimated £88 billion
     • HS2 will dramatically cut journey times
     • Further extensions possible
   • Ports
     • Importance of UK sea ports has declined over time
     • Many people now travel by air and Channel Tunnel meant lorries no longer need the ports
     • Cargo ships still arrive into UK ports but containerisation meant fewer workers are needed to load and unload them
     • Larger ships now used making less accessible ports redundant
     • UK ports remain largest in Europe, in terms of volume of goods handled
     • UK ports modern and work well so no major redevelopment planned
   • Airports
     • Airports Commission is part of government that deals with UK airports
     • Airports commission produced report in 2015, which recommended expansion of UK airports important for country's prosperity
     • Controversial issue because lots of people close to airports don't like noise and some lose their homes to make space for runways
     • Airport expansion can lead to a reduction in house prices in nearby areas
     • New runway been proposed for Heathrow
     • Development will generate estimated £147 billion over 60 years and 70,000 jobs by 2050
     • Cost of new scheme estimated at £18.6 billion

5. North-south divide

   • The divide
     • A wealth divide widened by businesses deciding to set up in the South of England
     • Those living in north of country experience lower incomes, higher unemployment and a lower standard of living than those in the south
     • The centre for cities is a charity that measures economic growth and change in 64 UK cities
     • 2015, found that for every 12 jobs created since 2004 in southern cities, only 1 created elsewhere
   • Strategies to resolve regional difference
     • Government have agreed devolution measures, which gives additional power and money to councils in north
     • Some people believe that professional jobs need to be created in the north
     • Popularity of universities have encouraged professionals to settle in the north
     • Relocation of some businesses and organisations can also help

6. UK and the wider world

   • Trade
     • UK imports and exports goods from many countries
     • Over 50% of UK trade is with EU countries
     • UK's next biggest trading partners are found in Asia and Oceania
     • Foreign exports also include money spent by tourists visiting the country
     • UK's biggest exports are machinery and transport equipment
   • Culture
     • Books, like Harry Potter sold worldwide
     • UK sports showcased through events like the Olympics, World Cup, Wimbeldon
     • UK architecture can be seen in many commonwealth countries
     • Tourists visit the UK to experience the culture
   • Transport
     • Increasing air travel is strengthening UK's links with other countries
     • UK has modern port facilities
     • UK has high speed rail links to Europe
   • Communications
     • UK linked to rest of the world via the internet
     • Internet cables beneath the sea provide fast connection to countries globally