Economy of the United Kingdom

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The economy of United Kingdom is a highly developed social market economy. It has the second-largest national economy in Europe after Germany, is the sixth-largest by nominal GDP in the world, and is tenth by GDP (PPP). It was once the largest economy in the world, and was the first to undergo the Industrial Revolution. Its official currency is the pound sterling. It was a member of the European Union until 2020, when it withdrew.


  • What is at issue is not union membership but compulsory union membership and not the right to strike but the right to compel others to strike. There is no need for any other explanation of why the British economy is decaying and the German highly prosperous. The trade unions, being politically sacrosanct, have been allowed to destroy the British economy, and since even somebody as sympathetic to labour as Lady Wootton has told us that “it is in fact the business of a union to be anti-social”, it is high time that somebody had the courage to eradicate that cancer of the British economy.
    • Friedrich Hayek, Letter (28 July 1977) printed in The Times (2 August 1977), p. 11

  • [The effect of the Suez Crisis on the French was quite different.] We turned across the Atlantic. They turned across the Rhine, and Europe was built without us. There is room for argument about the causes of what followed. There is no doubt about what happened. Over the first 13 years of the [European] Community's life national income per head increased by 72 per cent in the Six and by 35 per cent in Britain. The result was that from being almost the richest country in Western Europe we became one of the poorest. France for the first time since the industrial revolution surpassed us in economic strength. The German economy achieved nearly twice our weight.
  • The whole existence and development of capitalism in Britain and France between 1885 and 1960 was bound up with colonization, and Africa played a major role. African colonies meant surplus appropriated on a grand scale; they led to innovations and forward leaps in technology and the organization of capitalist enterprise; and they buttressed the capitalist system at home and abroad with fighting men. Sometimes, it appeared that these two principal colonial powers reaped so many colonial benefits that they suffered from “too much of a good thing.”
  • If simply printing and spending more money would cure our problems we should by now be one of the wealthiest nations in the Western world.—In the lifetime of the last Labour Government the amount of money in the economy went up by £20 thousand million but the number of jobs did not increase. Indeed, unemployment doubled and prices more than doubled too.—In the last three years (1976–79) the amount of money in the economy went up by 50%; but yet only 4%; went into output, the rest into higher prices and imports. The record is clear, printing money doesn't create jobs, it only creates more inflation. But there is another word for printing money—they call it “reflection”. It is a cosy word but a fraudulent device. It cuts the value of every pound in circulation, of every pound the thrifty have saved. It means spending money you can't afford, haven't earned and haven't got. You would accept that it is neither moral nor responsible for a family to live beyond its means. Equally it is neither moral nor responsible for a Government to spend beyond the nation's means, even for services which may be desirable. So we must curb public spending to amounts that can be financed by taxation at tolerable levels and borrowing at reasonable rates of interest.
  • For years there was a widespread belief that we could have inflation and a high level of employment at the same time. For years there was a belief that we could secure more jobs if we were prepared to put up with a little more inflation—always a little more, it was thought. The experience of the past 25 years has taught us on the Government Benches that those beliefs were a most damaging illusion. Inflation and unemployment, instead of moving in opposite directions, rose inexorably together. As Governments tried to stimulate employment by pumping money into the economy they caused inflation. The inflation led to higher costs. The higher costs meant loss of ability to compete. The few jobs that we had gained were soon lost; and so were a lot more with them. And then, from a higher level of unemployment and inflation, the process was started all over again, and each time round both inflation and unemployment rose. In Parliament after Parliament, each new Government had a higher average rate of inflation and unemployment than the preceding Government. It is that cycle that we have set out to break.
  • We've been working to restore the political system to bring out all that was best in the British character. That's what we've done. It's called Thatcherism – it's got nothing to do with Thatcher except that I was merely the vehicle for it. But it is in everything I do. It's a mixture of fundamentally sound economics. You live within your means; you have honest money, so therefore you don't make reckless promises. You recognise human nature is such that it needs incentives to work harder, so you cut your tax. It is about being worthwhile and honourable. And about the family. And about that something which is really rather unique and enterprising in the British character – it's about how we built an Empire, and how we gave sound administration and sound law to large areas of the world. All those things are still there in the British people aren't they?
    • Margaret Thatcher, Interview with Rodney Tyler (16 June 1987), quoted in Rodney Tyler, Campaign! The Selling of the Prime Minister (1987), p. 251

See also


Encyclopedic article on Economy of the United Kingdom on Wikipedia