Economy of the United Kingdom

The economy of England is part of the Commonwealth of Nations, the G7, the G8, the G20, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Bank, the World Trade Organisation and the United Nations. The Gross Domestic Product (GDP) of the UK is over 2 trillion USD. Great Britain is one of the world's leading industrial nations with the sixth-largest national world economy. However, it lacks most of the raw materials needed for industry and must also import about 40 percent of its food supplies. This makes the country highly dependent on the export of manufactured goods in exchange for raw materials and foodstuffs. Manufacturing and service industries employ more than one third of the total work force.

The UK was one of the first to industrialise in the 18th century. Major industries include mechanical and electrical engineering, food processing, iron and steel, paper and printing, motor vehicles, chemicals, textiles, and aircraft. Production of oil from North Sea wells began in 1975 and by 1979 the country was self-sufficient in petroleum. Coal is also mined in large quantities. Chief commodities are dairy products, beef cattle and sheep for meat and wool. Main industries, such as coal, gas, electricity, railroad, shipbuilding, and aerospace industries are becoming increasingly privatised.

The service sector has become the largest segment of the economy with manufacturing and primary industries in decline. Tourism accounts for £106 billion of GDP which is between 9-10 percent of the economy (results 2020). It also employs over 2.6 million people.

Brexit and Covid-19 effects in the UK

UK's economy has been gradually deteriorating over the past few years. Studies from The Resolution Foundation and the London School of Economics show that the UK faced a long decade of decline and underperformance due to the COVID-19 pandemic and the expensive challenge of making the economy less reliant on fossil fuels.

But, while the coronavirus epidemia provoked a big impact on the economy, experts calculated that the UK's exit from the EU has become an "ultimately longer-lasting and more significant" shift for the country's economy, causing a 14% decrease in trade in goods in the first quarter of 2021 compared to the same period of time in 2020.
At the same time, trade with non-EU countries had not yet increased, despite efforts by the UK's trade department to strike new deals this year.

As an example, statistics show that in January 2021, the value of good exported to the EU fell from £13.6 billion to £7.88 billion, while the value of imports fell from 22.7 billion to 15.8 billion. This has been considered the greatest fall in trade for both imports and exports since 1997.

But there had been some other consequences regarding the damage to the U.K.'s economic growth, the working market, the trading with both EU and non-EU members, etc. Some of them are:

• Uncertainty over Brexit slowed the U.K.'s growth from 2.4% in 2015 to 1.0% in 2019.
• The British pound fell from $1.48 on the day of the referendum to $1.36 the next day. That helps exports but increases the prices of imports.
• Employers are having a harder time finding applicants. One reason is that EU-born workers left the U.K., their numbers falling by 95% in 2017. This has hit the low-skilled and medium-skilled occupations the most.
• The U.K. must negotiate new trade agreements with countries outside of the EU, which had more than 40 trade agreements with 70 countries already in place

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Economy of London

London is the economic brain of England and the UK. It is one of the world's largest financial centres with the largest city GDP in Europe in excess of $503 billion in 2019.
London's largest industry is finance as the city has many banks, brokers, insurers, legal and accounting firms. The financial districts include Canary Wharf to the east of the City with the global headquarters of HSBC and Barclays - two of the largest banks in the world.

These are far from the only headquarters in London. More than half of the UK's top 100 listed companies and over 100 of Europe's 500 largest companies are headquartered in central London. Over 70 percent of the FTSE 100 are located within London's metropolitan area, and 75 percent of Fortune 500 companies have offices in London. London is also the headquarters for four of the world's six largest law firms. The BBC is a key employer with headquarters in the city. Many national newspapers also come out of London. Soho is the centre of London's post-production industry. About half a million employees work in manufacturing and construction.

Tourism is one of primary industries for England and hence, London. It is the 5th most visited city in the world with almost 20 million international visitors per year. The Tourist Board for London, Visit London, provides a host of services for the city.

Once the largest port in the world, the Port of London is now the second-largest in the United Kingdom. It handles about 48 million tonnes of cargo each year.

Brexit impact on London's economy

The referendum on leaving the European Union immediately impacted the U.K.'s financial centre of London, which saw only 1.4% growth in 2018 and was close to zero in 2019. Brexit also diminished business investment by 11% between 2016 and 2019.

The UK banking sector lost its financial passport to make trades freely within the EU. International companies are less likely to use London as an English-speaking entry into the EU economy and, therefore, Barclay's moved 5,000 clients to its Irish subsidiary, while Goldman Sachs, JP Morgan and Morgan Stanley switched 10% of their clients. Bank of America has also transferred 100 bankers to its Dublin office and 400 to a broker dealer unit in Paris.

Covid-19 economic impact

Regarding Covid-19, there have been 4.7 million confirmed cases of coronavirus in the UK (27,500 people in London) and more than 128,000 people have died in the country, government figures show (summer 2021).

Economically, the number of job vacancies in London has continued to recover (about 170,000 openings in mid 2021), after tourism and shopping areas had been reopened again thanks to the high amount of vaccinations injected. 

Along with retail and hospitality sectors, London's cultural and creative sectors are the areas where the pandemic crises hit economically the most.
Studies by Oxford Economics suggests nearly 110,000 creative jobs in London are at risk (27% of the national total), with an associated reduction in economic output (GVA) of £14.1 billion: more than half the national total.

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