Text: Žikica Milošević
When we think about the British economy, what we will imagine and what image we will have in mind really depends on the decade and the century. The 19th century could be the image of working class flats and Dickens’ novels, the factories and the Industrial Revolution. At the beginning of the 20th century it could be something like the scene from Peaky Blinders. In the pre-Thatcher era it could be coal mines, while during her era it could the City of London and yuppies. Nowadays it is gentrified and polished, even in the areas of Manchester that were dangerous in 1985. It is post-Industrial.
BIG, VERY BIG
Well, the economy of the UK is, as the figures say, and which we will cite, the fifth-largest national economy in the world, measured in terms of nominal gross domestic product (GDP), the ninth-largest in terms of purchasing power parity (PPP) and the nineteenth-largest measured according to GDP per capita, comprising 3.9% of world GDP. It is the second-largest economy in the European Union by both metrics, after Germany, of course. Now it is clear how much the EU is going to lose because of Brexit, but the UK economy is still very open to foreign investments and is traditionally liberal, even in the days of Labour rule, which is why it is one of the most globalised economies. It had the second-largest inward foreign direct investment and the third-largest outward foreign direct investment in 2016. Of the world’s 500 largest companies, 26 are headquartered in the UK… Not bad at all.
One of the main features of the British economy is that it is service-orientated and has strong ties with the banking sector and real estate, all of which fuelled the financial crisis that was particularly harsh in the UK. Luckily, they had their pound and not the euro, like Spain, otherwise they would have shared the same fate. The UK gradually relocated its agriculture to its colonies, while the remaining factories were shook up by Baroness Thatcher’s reforms, dubbed Thatcherism, i.e. neoliberalism. This makes the financial services industry particularly important, and makes London the world’s largest financial centre. A lot of the economy is reliant on oil. This is all strikingly different from the image we have from the First and Second Industrial Revolutions. Well, those were the days! The British economy accounted for 9.1% of the world’s GDP in 1870! The U.S. and Germany later accelerated their growth, but Britain remained strong.
Before switching to the decimal system, the pound sterling was a strange currency, and its name was derived from the fact that one Norman ‘pound’ had 240 sterlings or silver pennies. This was a stubborn currency and, prior to decimalisation in 1971, the pound was divided into 20 shillings, with each shilling worth 12 pence, making 240 pence to the pound. That seems preposterous to us, but was normal for the Brits. However, forget the history… The UK pound is still strong: it is the world’s third-largest reserve currency after the United States dollar and the euro, and is also one of the ten most-valued currencies in the world. This is not a joke, even if the Empire’s glory days are over.