ECONOMY
By the end of the 18th century, Great Britain had established itself as an important trading nation. Following rapid industrialization in the 19th century, it developed into the world's leading industrial power, but the effects of two world wars greatly diminished the UK's economic strength. During the post-war years, many parts of the economy were nationalized; thereafter the country fell significantly behind the other large European economies. In the three decades from 1950 to 1980, the economy grew by just under 2 per cent a year on average, compared with 3.5 per cent in France and more than 4.5 per cent in West Germany. In 1950 the UK was ranked sixth in the world in per capita income. By 1980 it had fallen below the top 20.
After Margaret Thatcher became prime minister in 1979, there was a major shift in emphasis towards industry deregulation and market forces. Many industries were privatized, and the power of the trade unions was greatly reduced. As a result, the manufacturing sector became more competitive but smaller, and unemployment and social discontent increased. From 1983, on emerging from recession, until the late 1980s, the UK's economy was one of the fastest growing in Europe. After another surge in inflation in the late 1980s, the rate has been brought down to manageable levels, but it is questionable whether an inflationary tendency has finally been curbed. The UK has since been among the first of the European countries to show signs of recovery after the recession of the early 1990s. However, unemployment remains high, and there are still worries about the UK's competitiveness.
The UK does the bulk of its trading within the European Union (EU). Natural resources include oil, coal (a once important coal industry has shrunk dramatically in the past decade because of competition from other fuels and from less expensive imported coal), natural gas, and iron ore. Important exports include crude oil (from the North Sea), manufactured goods, and consumer items. The service sector is more important than manufacturing, and London is one of the world's most important financial centres. The currency is the pound sterling. Of the UK's gross domestic product (GDP), industry accounts for about 25 per cent (1991), while agriculture's share is less than 2 per cent (1991), though the UK's farmers supply the country with about 60 per cent of its needs.
In 1992 England accounted for 80 per cent of the UK's economy. The GDP per capita is higher in England than in the rest of the UK. In general, the most prosperous parts of England tend to be in the south. The heavy manufacturing industries of the Midlands and northern counties have gone through a massive decline, and there has been a substantial shift towards the service sector.