Causes of economic change
The UK economy is undergoing many changes. As the UK approaches a post-industrial era, the country is looking to be economically and environmentally sustainable, with greater links to the wider world.
Watch this video to learn how the UK's economy has changed over time.
Globalisation
The way in which the world has become more interconnected. It refers to how people communicate as well as world trade, international investment and the sharing of ideas. describes the way in which the world has become more interconnected. Globalisation has led to an increase in The exchange of goods for money between producers and consumers., When a country invests in another country., communication between different countries and the sharing of ideas.
In the past, the UK Activities in a country concerned with the making, distribution, and use of goods and services. was based on activities that took place within the country and within An association comprising the UK, its dependencies, and many former British colonies.. The growth of globalisation has meant that the UK economy is now more dependent on other countries. An example of this is the Factories which make goods, such as TVs, clothes and cars.. In the 1900s, 55% of the population worked in A type of industry where raw materials are made into something. Often called 'manufacturing'. jobs. In recent years, this figure had dropped to around 15%. Globalisation has allowed the UK to connect with other countries - it is possible to send orders abroad, locate factories abroad and get products shipped in to UK ports.
Watch this video to learn about globalisation.
Government policies
The government manages the UK economy through the The place where a country's money is kept.. Each year a budget is produced, which sets out things such as the minimum wage, spending on public services and levels of tax.
During the 1980s the UK was performing better than most European countries. Several things helped this growth:
- Many state-owned businesses in the UK were privatised, eg British Telecom and British Gas. They had been owned by the government, but they were sold to individuals or other companies. This made a lot of money for the government.
- Markets were deregulated. This means that the government became less involved in running things and some companies had to find better ways to make a The difference between revenue and costs. A key aim for all businesses..
- Lots of factories and coal pits were closed. The government said that they could no longer compete with foreign countries where wages were lower. This is when UK jobs first began to go overseas.
- The An industry that involves payment for a service, eg an accountant. grew. Wages in the service sector are generally better than in the The primary sector involves extracting raw materials, rearing animals and growing crops. and manufacturing sectors.
The UK economy continued to grow into the 1990s. The government had decided to keep taxes low so people had more money and could afford to buy more consumer goods.
In 2008, there was a global financial crisis and the UK entered a period of A time of temporary economic decline when trade and industrial activity are reduced.. Many of the UK's banks, eg RBS and Lloyds Banking Group, were helped out using government money. This was very expensive for the country and the level of national Money that is owed to someone else. grew.
In 2010, a programme of austerity was put in place. The government made spending cuts to save money and carried out the policy of Aims to support the economy by encouraging people to save less and spend more. It can also refer to the introduction of new money into a country. to stimulate the economy. The spending cuts impacted many public services.
The economy steadily improved until the Covid 19 pandemic hit the country in 2020. The UK’s Gross Domestic Product (GDP)) declined by 9.7% in 2020 - the steepest drop since records began in 1948. This is because many people were unable to work and the government had to spend money to deal with the crisis.
