Economic history of India

The known Economic history of India begins with the Indus Valley civilization. The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport. Around 600 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 BC the Maurya Empire united most of the Indian subcontinent. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity.

For the next 1500 years, India produced its classical civilizations such as the Rashtrakutas, Hoysalas and Western Gangas. During this period India is estimated to have had the largest economy of the ancient and medieval world between the 1st and 15th centuries AD, controlling between one third and one fourth of the world's wealth up to the time of the Marathas, from whence it rapidly declined during European rule.

India has followed central planning for most of its independent history, which have included extensive public ownership, regulation, red tape, and trade barriers. After the 1991 economic crisis, the central government launched economic liberalization. India has turned towards a more capitalist system and has emerged as one of the fastest growing large economies of the world.

Indus Valley civilization

The Indus Valley civilization, the first known permanent and predominantly urban settlement that flourished between 2800 BC to 1800 BC boasted of an advanced and thriving economic system. Its citizens practiced agriculture, domesticated animals, made sharp tools and weapons from copper, bronze and tin and traded with other cities. Evidence of well laid streets, layouts, drainage system and water supply in the valley's major cities, Harappa, Lothal, Mohenjo-daro and Rakhigarhi reveals their knowledge of urban planning. One of the theories about their end is that they eventually overused their resources, and slowly died out.

Ancient and medieval characteristics

Though ancient India had a significant urban population, much of India's population resided in villages, whose economy was largely isolated and self-sustaining. Agriculture was the predominant occupation of the populace and satisfied a village's food requirements besides providing raw materials for hand based industries like textile, food processing and crafts. Besides farmers, other classes of people were barbers, carpenters, doctors (Ayurvedic practitioners), goldsmiths, weavers etc.

Religion

Religion, especially Hinduism, played an influential role in shaping economic activities. The Indian caste system castes and sub-castes functioned much like medieval European guilds, ensuring division of labour and provided for training of apprentices. The caste system restricted people from changing one's occupation and aspiring to an upper caste's lifestyle. Thus, a barber could not become a goldsmith and even a highly skilled carpenter could not aspire to the lifestyle or privileges enjoyed by a Kshatriya (person from a warrior class). This barrier to mobility on labour restricted economic prosperity to a few castes.

Pilgrimage towns like Allahabad, Benares, Nasik and Puri, mostly centred around rivers, developed into centres of trade and commerce. Religious functions, festivals and the practice of taking a pilgrimage resulted in a flourishing pilgrimage economy.

Family business

In the joint family system, members of a family pooled their resources to maintain the family and invest in business ventures. The system ensured younger members were trained and employed in the family business and the older and disabled persons would be supported by the family. The system, by preventing the agricultural land from being split ensured higher yield because of the benefits of scale. The system curbed members from taking initiative because of the support system and family or work.

Organizational entities

Along with the family-run business and individually owned business enterprises, ancient India possessed a number of other forms of engaging in business or collective activity, including the gana, pani, puga, vrata, sangha, nigama and sreni. Nigama, pani and sreni refer most often to economic organizations of merchants, craftspeople and artisans, and perhaps even para-military entities. In particular, the sreni was a complex organizational entity that shares many similarities with modern corporations, which were being used in India from around the 8th century BC until around the 10th century AD. The use of such entities in ancient India was widespread including virtually every kind of business, political and municipal activity.

The sreni was a separate legal entity which had the ability to hold property separately from its owners, construct its own rules for governing the behavior of its members, and for it to contract, sue and be sued in its own name. Some ancient sources such as Laws of Manu VIII and Chanakya's Arthashastra have rules for lawsuits between two or more sreni and some sources make reference to a government official (Bhandagarika) who worked as an arbitrator for disputes amongst sreni from at least the 6th century BC onwards. There were between 18 to 150 sreni at various times in ancient India covering both trading and craft activities. This level of specialization of occupations is indicative of a developed economy in which the sreni played a critical role. Some sreni could have over 1000 members as there were apparently no upper limits on the number of members.

The sreni had a considerable degree of centralised management. The headman of the sreni represented the interests of the sreni in the king’s court and in many official business matters. The headman could also bind the sreni in contracts, set the conditions of work within the sreni, often received a higher salary, and was the administrative authority within the sreni. The headman was often selected via an election by the members of the sreni, who could also be removed from power by the general assembly. The headman often ran the enterprise with two to five executive officers, who were also elected by the assembly.

Coinage

Punch marked silver ingots, in circulation around the 5th century BC and the first metallic coins were minted around 6th century BC by the Mahajanapadas of the Gangetic plains were the earliest traces of coinage in India. While India's many kingdoms and rulers issued coins, barter was still widely prevalent. Villages paid a portion of their agricultural produce as revenue while its craftsmen received a stipend out of the crops at harvest time for their services. Each village, as an economic unit, was mostly self-sufficient.

Exports

Surplus of Indian manufactures, like the muslin of Dacca, calicos of Bengal, shawls of Kashmir, steel and iron works, silk, and other textiles and handicrafts, agricultural products like pepper, cinnamon, opium and indigo were exported to Europe, the Middle East and South East Asia in return for gold and silver.

GDP estimate

According to economic historian Angus Maddison in his book The World Economy: A Millennial Perspective, India had the world's largest economy from the first to 11th century, and in the 18th century, with a (32.9%) share of world GDP in the 1st century to (28.9%) in 1000 AD, and in 1700 AD with (24.4%).

Maurya Empire

During the Maurya Empire (c. 321-185 BC), there were a number of important changes and developments to the Indian economy. It was the first time most of India was unified under one ruler. With an empire in place, the trade routes throughout India became more secure thereby reducing the risk associated with the transportation of goods. The empire spent considerable resources building roads and maintaining them throughout India. The improved infrastructure combined with increased security, greater uniformity in measurements, and increasing usage of coins as currency enhanced trade. During this time, the Arthasastra ("science of the state") was written by the Chanakya, an adviser to Chandragupta Maurya. The Arthasastra is one of the most important ancient texts on economics, politics and administration. It was a treatise on how to maintain and expand power, obtain material gain, and administer an empire. It covers both theory and implementation and contains many clear and detailed rules regarding the governing of an empire. The exhaustive account of the economic ideas embedded in the Arthasastra has been given by Ratan Lal Basu in his famous work "Ancient Indian Economic Thought, Relevance For Today".

The economic situation in the Maurya Empire is comparable to the Roman Empire several centuries later, which both had extensive trade connections and both had organizations similar to corporations. While Rome had organizational entities which were largely used for public state-driven projects, Maurya India had numerous private commercial entities which existed purely for private commerce. This was due to the Mauryas having to contend with pre-existing sreni hence they were more concerned about keeping the support of these pre-existing private commercial entities. The Romans did not have such pre-existing entities to contend with; hence, they were able to prevent such entities from developing.

Mughal Empire

1526

During this period, Mughal India was the second largest economy in the world. The gross domestic product of India in the 16th century was estimated at about 24.5% of the world economy, in comparison to Ming China's 25% share.

1600

An estimate of India's pre-colonial economy puts the annual revenue of Emperor Akbar's treasury in 1600 at £17.5 million, in contrast to the entire treasury of Great Britain in 1800, which totalled £16 million. The gross domestic product of Mughal India in 1600 was estimated at about 22.6% the world economy, in comparison to Ming China's 29.2% share.

1700

By this time, the Mughal Empire expanded to almost 1,000 million acres (4.0E+6 km2), or 90 per cent of South Asia, and a uniform customs and tax administration system was enforced. Annual revenue reported by the Emperor Aurangzeb's exchequer exceeded £100 million in 1700 (twice that of Europe then). Thus, India emerged as the world's largest economy, followed by Manchu China and Western Europe.

Nawabs, Marathas and Nizams

1725 - 1750

During this period, Mughals were replaced by the Nawabs in north India, the Marathas in central India and the Nizams in south India. However, the Mughal tax administration system was left largely intact. China was the world's largest economy followed by India and France. The gross domestic product of India in 1750 was estimated at about 80 per cent that of China.

1750 - 1775

During this period, about two-thirds of the civil service in India was still dominated by Muslim officers though the Maratha empire expanded to almost 250 million acres (1.0E+6 km2), or 34 per cent of Indian landscape, while the Nizam's dominion expanded to almost 125 million acres (510,000 km2), or 17 per cent of Indian landscape. China was the world's largest economy followed by India and France. The gross domestic product of India in 1775 was estimated at about 70 per cent that of China. Nevertheless, a devastating famine broke out in the eastern coast in early 1770s killing 5 per cent of the national population.

British rule

Main article:  British rule

Economy of India under Company rule and Economy of India under the British Raj

The British colonial rule created an institutional environment that did stabilise the law and order situation to a large extent. The British foreign policies however stifled the trade with rest of the world. They created a well developed system of railways, telegraphs and a modern legal system. The infrastructure the British created was mainly geared towards the exploitation of resources ofin the world and totally stagnant, with industrial development stalled, agriculture unable to feed a rapidly accelerating population. They were subject to frequent famines, had one of the world's lowest life expectancies, suffered from pervasive malnutrition and were largely illiterate.

GDP estimates

An estimate by Angus Maddison argues that India's share of the world income went from 24.4% in 1700, comparable to Europe's share of 23.3%, to a low of 3.8% in 1952. While Indian leaders during the Independence struggle and left-nationalist economic historians have blamed the colonial rule for the dismal state of India's economy, a broader macroeconomic view of India during this period reveals that there were segments of both growth and decline, resulting from changes brought about by colonialism and a world that was moving towards industrialization and economic integration.

Price of Silver - Rate of Exchange: 1871-72 to 1892-93

Period Price of Silver (in pence per Troy ounce) Rupee exchange rate (in pence)

1871–1872 60½ 23 ⅛

1875–1876 56¾ 21⅝

1879–1880 51¼ 20

1883–1884 50½ 19½

1887–1888 44⅝ 18⅞

1890–1951 47 11/16 18⅛

1891–1892 45 16¾

1892–1893 39 15

Source: B.E. Dadachanji. History of Indian Currency and Exchange, 3rd enlarged ed.

(Bombay: D.B. Taraporevala Sons & Co, 1934), p. 15.

The fall of the Rupee

The crisis of silver currency and bank notes (1750–1870)

After its victory in the Franco-Prussian War (1870–71), Germany extracted a huge indemnity from France of £200,000,000, and then moved to join Britain on a gold standard for currency. France, the US and other industrializing countries followed Germany in adopting a gold standard throughout the 1870s. At the same time, countries, such as Japan, which did not have the necessary access to gold or those, such as India, which were subject to imperial policies that determined that they did not move to a gold standard, remained mostly on a silver standard. A huge divide between silver-based and gold-based economies resulted. The worst affected were economies with a silver standard that traded mainly with economies with a gold standard. With discovery of more and more silver reserves, those currencies based on gold continued to rise in value and those based on silver were declining due to demonetization of silver. For India which carried out most of its trade with gold based countries, especially Britain, the impact of this shift was profound. As the price of silver continued to fall, so too did the exchange value of the rupee, when measured against sterling.

British East India Company rule

1775–1800

During this period, the East India Company began tax administration reforms in a fast expanding empire spread over 250 million acres (1.0E+6 km2), or 35 per cent of Indian domain. Indirect rule was also established on protectorates and buffer states. China was the world's largest economy followed by India and France. The gross domestic product of India in 1800 was estimated at about 60 per cent that of China, not taking into account the falling price of Rupee.

The Company treasury reported annual revenue of £111 million in circa 1800[citation needed]. This needs to converted to Indian Rupees with the falling price of Rupee to assess the impact on Indian economy. Almost all of the Indian land revenues were diverted by the Company to help the British Crown defend herself in the Napoleonic Wars.

1800–1825

China was the world's largest economy followed by India and France. The gross domestic product of India in 1825 was estimated at about 50 per cent that of China. British cotton exports reach 3 per cent of the Indian market by 1825.(pdf)

1825–1850

China was the world's largest economy followed by the UK and India. Industrial revolution in the UK catapulted the nation to the top league of Europe for the first time ever. During this period, British foreign and economic policies began treating India as an unequal partner for the first time. English replaced Persian as the official language of India. The gross domestic product of India in 1850 was estimated at about 40 per cent that of China. British cotton exports reach 30 per cent of the Indian market by 1850.

Decline of the cotton textile industry

Ray (2009) raises three basic questions about the 19th-century cotton textile industry in Bengal: when did the industry begin to decay, what was the extent of its decay during the early 19th century, and what were the factors that led to this? Since there is no data on production, Ray uses the industry's market performance and its consumption of raw materials. Ray challenges the prevailing belief that the industry's permanent decline started in the late 18th century or the early 19th century. The decline actually started in the mid-1820s. The pace of its decline was, however, slow though steady at the beginning, but reached crisis point by 1860, when 563,000 workers lost their jobs. Ray estimates that the industry shrank by about 28% by 1850. However, it survived in the high-end and low-end domestic markets. Ray agrees that British discriminatory policies undoubtedly depressed the industry's export outlet, but suggests its decay is better explained by technological innovations in Britain.

British Raj

Main article:  British Raj

1850–1875

The formal dissolution of the declining Mughal Dynasty heralded a change in British treatment of Indian subjects. During the British Raj, massive railway projects were begun in earnest and government jobs and guaranteed pensions attracted a large number of upper caste Hindus into the civil service for the first time. China was the world's largest economy followed by the USA, UK and India. The gross domestic product of India in 1875 was estimated at about 30 per cent that of China (or 60 per cent that of the USA), not taking into account the falling price of Rupee. British cotton exports reach 55 per cent of the Indian market by 1875.(pdf)

1875–1900

USA was the world's largest economy followed by China, UK, Germany and India. Collapse of the central authority of the Qing Dynasty and the resultant chaos triggered China's short but rapid decline on the world stage. The gross domestic product of India in 1900 was estimated at about 20 per cent that of the USA.

The Crown treasury reported annual revenue of £122 million in circa 1900[citation needed]. While the revenue in terms of Pound Sterlings reported very low growth, it does not take into account the price of Rupee falling drastically, which is needed to understand the growth of revenue in terms of Indian economy.

1900–1925

US was the world's largest economy followed by the UK, China, France, Germany, India and the USSR. The gross domestic product of India in 1925 was estimated at about 10 per cent that of the US.

Zoroastrian business conglomerates like Tata and Godrej begin to enter textile, mining and durable goods industries.

The Crown treasury reported annual revenue of £125 million in 1925.

During this period, India became a net importer from net exporter of foodgrains. A US Dollar was exchanged at 2.76 Rupees.

1925–1950

US was the world's largest economy followed by the USSR, UK, China, France, Germany and India. The gross domestic product of India in 1950 was estimated at about 7 per cent that of the US.

The Great Depression of 1929 had a very severe impact on India, which was then under the British. During the period 1929–1937, exports and imports fell drastically crippling seaborne international trade. The railways and the agricultural sector were the most affected.

The international financial crisis resulted in the soaring prices of commodities. The discontent of farmers manifested itself in rebellions and riots. The Salt Satyagraha of 1930 was one of the measures undertaken as a response to heavy taxation during the Great Depression.

The Great Depression and the economic policies of the Government of British India worsened the already deteriorating Indo-British relations. When the first general elections were held according to the Government of India Act 1935, anti-British feelings resulted in the Indian National Congress winning in most provinces with a very high percentage of the vote share.

The newly independent but weak Union government's treasury reported annual revenue of £334 million in 1950. In contrast, Nizam Asaf Jah VII of south India was widely reported to have a fortune of almost £668 million then.

About one-sixth of the national population were urban by 1950. A US Dollar was exchanged at 4.79 Rupees.

Economic impact of British imperialism

Debate continues about the economic impact of British imperialism on India. The issue was actually raised by conservative British politician Edmund Burke who in the 1780s vehemently attacked the East India Company, claiming that Warren Hastings and other top officials had ruined the Indian economy and society. Indian historian Rajat Kanta Ray (1998) continues this line of reasoning, saying the new economy brought by the British in the 18th century was a form of plunder and a catastrophe for the traditional economy of Mughal India. (Economic Drain Theory) Ray believes that British depleted the food and money stocks and imposed high taxes that helped cause the terrible famine of 1770, which killed a third of the people of Bengal.

P. J. Marshall, a British historian known for his work on the British empire, has a reinterpretation of the view that the prosperity of the formerly benign Mughal rule gave way to poverty and anarchy. Marshall argues the British takeover did not make any sharp break with the past. British control was delegated largely through regional rulers and was sustained by a generally prosperous economy for the rest of the 18th century, except the frequent famines with very high fatality rate(Famine in India). Marshall notes the British raised revenue through local tax administrators and kept the old Mughal rates of taxation. Instead of the Indian nationalist account of the British as alien aggressors, seizing power by brute force and impoverishing all of India, Marshall presents a British nationalist interpretation in which the British were not in full control but instead were controllers in what was primarily an Indian play and in which their ability to keep power depended upon excellent cooperation with Indian elites. Marshall admits that much of his interpretation is still rejected by many historians.

Republic of India

See also: Economy of India

Nehruvian Socialist rate of growth

Compare India (orange) with South Korea (yellow). Both started from about the same income level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as a percent of the American GDP per capita.

The "Nehruvian Socialist rate of growth" is used to refer to the low annual growth rate of the economy of India before 1991. It stagnated at around 3.5% from 1950s to 1980s, while per capita income growth averaged extremely low 1.3% a year. At the same time, South Korea grew by 10% and Taiwan by 12%. This phenomenon was called the "Hindu rate of growth", by the leading Indian economist Raj Krishna.

Socialist reforms (1950-1975)

USA was the world's largest economy followed by the USSR, Japan, Germany and China. The gross domestic product of India in 1975 was estimated at about 5 per cent that of the USA.

Before independence a large share of tax revenue was generated by the land tax, which was in effect a lump sum tax on land. Since then land taxes have steadily declined as a share of revenues and completely replaced by sales taxes.

Moreover, the structural economic problems inherited at independence were exacerbated by the costs associated with the partition of British India, which had resulted in about 2 to 4 million refugees fleeing past each other across the new borders between India and Pakistan. The settlement of refugees was a considerable financial strain. Partition also divided India into complementary economic zones. Under the British, jute and cotton were grown in the eastern part of Bengal, the area that became East Pakistan (after 1971, Bangladesh), but processing took place mostly in the western part of Bengal, which became the Indian state of West Bengal in 1947. As a result, after independence India had to employ land previously used for food production to cultivate cotton and jute for its mills.

Government was assigned an important role in the process of alleviating poverty, and since 1951 a series of plans had guided the country's economic development. Although there was considerable growth in the 1950s, the long-term rates of real growth were less positive than India's politicians desired and much less than those of many other Asian countries.

Toward the end of Nehru's term as prime minister, India would continue to face serious food shortages despite hoped for progress and increases in agricultural production. There was mass starvation in states like Bihar due to socialist controls on the economy. Farmers as well as industrialists were ham-strung with controls (License Raj) on their freedom to run their respective businesses.

Despite such atrocious conditions in the country Nehru's popularity remained unaffected because of the larger-than-life image and the personality cult that was promoted by the state controlled mass media.

Since 1950, India ran into trade deficits that increased in magnitude in the 1960s. The Government of India had a budget deficit problem and therefore could not borrow money from abroad or from the private sector, which itself had a negative savings rate. As a result, the government issued bonds to the RBI, which increased the money supply, leading to inflation. In 1966, foreign aid, which was hitherto a key factor in preventing devaluation of the rupee was finally cut off and India was told it had to liberalise its restrictions on trade before foreign aid would again materialise. The response was the politically unpopular step of devaluation accompanied by liberalisation. The Indo-Pakistani War of 1965 led the US and other countries friendly towards Pakistan to withdraw foreign aid to India, which further necessitated devaluation. Defence spending in 1965/1966 was 24.06% of total expenditure, the highest in the period from 1965 to 1989. This, accompanied by the drought of 1965/1966, led to a severe devaluation of the rupee. Current GDP per capita grew 33% in the Sixties reaching a peak growth of 142% in the Seventies, decelerating sharply back to 41% in the Eighties and 20% in the Nineties.

From FY 1951 to FY 1979, the economy grew at an average rate of about 3.1 percent a year in constant prices, or at an annual rate of 1.0 percent per capita (see table 16, Appendix). During this period, industry grew at an average rate of 4.5 percent a year, compared with an annual average of 3.0 percent for agriculture. They managed to tamp down on the natural business acumen and abilities of the population, yet some economists differed over the relative importance of those factors.

Structural deficiencies, such as the need for institutional changes in agriculture and the inefficiency of much of the centrally directed industrial sector, also contributed to economic stagnation. Some other excuses that were generally offered were - War with China in 1962 and with Pakistan in 1965 and 1971; a flood of refugees from East Pakistan in 1971; droughts in 1965, 1966, 1971, and 1972; currency devaluation in 1966; and the first world oil crisis, in 1973-1974, all jolted the economy.

This is a chart of trend of gross domestic product of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also the IMF database.

Year Gross Domestic Product US Dollar Exchange Per Capita Income

(as % of USA)

1950 100,850 4.79 Indian Rupees 1.56

1955 110,300 4.79 Indian Rupees 2.33

1960 174,070 4.77 Indian Rupees 2.88

1965 280,160 4.78 Indian Rupees 3.26

1970 462,490 7.56 Indian Rupees 2.23

1975 842,210 8.39 Indian Rupees 2.18

The Union government treasury reported annual revenue of £5-6 billion in 1975 thus registering an average annual growth of almost 12 per cent during the third quarter of 20th century. Nevertheless, prime minister Indira proclaimed emergency and suspended the Constitution in 1975. About one-fifth of the national population were urban by 1975.

1975 - 2000

Economic liberalization in India

Service markets which would enjoy much lighter burden of regulation and other obstacles became more successful than still regulated sectors. For example, world-famous business process services are very lightly regulated.

Economic liberalization in India in the 1990s and first decade of the 21st century led to large changes in the economy.

This is a chart of trend of gross domestic product and foreign trade of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also the IMF database.

Year Gross Domestic Product Exports Imports US Dollar Exchange Inflation Index (2000=100) Per Capita Income

(as % of USA)

1975 842,210 8.39 Indian Rupees 2.18

1980 1,380,334 90,290 135,960 7.86 Indian Rupees 18 2.08

1985 2,729,350 149,510 217,540 12.36 Indian Rupees 28 1.60

1990 5,542,706 406,350 486,980 17.50 Indian Rupees 42 1.56

1995 11,571,882 1,307,330 1,449,530 32.42 Indian Rupees 69 1.32

2000 20,791,898 2,781,260 2,975,230 44.94 Indian Rupees 100 1.26

 About one-fourth of the national population were urban by 2000.

2000 - present

The gross domestic product of India in 2007 was estimated at about 8 per cent that of the USA. National Democratic Alliance led by Bharatiya Janata Party (BJP), was in helm of economic affairs from 1998-2004. During this period there were two finance ministers, viz., Yashwant Sinha (1998–2003) and Jaswant Singh (2003–2004). The main economic achievement of the government was the universal license in telecommunication field, which allows CDMA license holders to provide GSM services and vice versa. NDA started off the Golden Quadrilateral road network connecting main metros of Delhi, Chennai, Mumbai and Kolkata. The project, still under construction, was one of the most ambitious infrastructure projects of independent India. Simultaneously, North-South and East-West highway projects were planned and construction was started.

The top 3 per cent of the population still contribute 50 per cent of the GDP and benefits of economic growth have not trickled down. Education for all is still an unrealised dream in India. This was made a fundamental right by amending the constitution of India and huge amount of money was pumped into the project under the name of Sarva Shiksha Abhiyan. This project met with limited success. Graduate unemployment was estimated at 34 million nationwide.

Currently, the economic activity in India has taken on a dynamic character which is at once curtailed by creaky infrastructure, for example dilapidated roads and severe shortages of electricity, and cumbersome justice system yet at the same time accelerated by the sheer enthusiasm and ambition of industrialists and the populace. The upward economic cycle in India is expected in short time to effectively address the short comings and bottlenecks of the infrastructure. The fast changing, seemingly chaotic and unsettled situation is much more hopeful and reassuring than the socialist morass that was the Nehru and Indira Gandhi legacy.

This is a chart of trend of gross domestic product and foreign trade of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also the IMF database.

Year Gross Domestic Product Exports Imports US Dollar Exchange Inflation Index (2000=100) Per Capita Income

(as % of USA)

2000 20,791,898 2,781,260 2,975,230 44.94 Indian Rupees 100 1.26

2005 34,195,278 44.09 Indian Rupees 121 1.64

For purchasing power parity comparisons, the US Dollar is exchanged at 9.46 Rupees only. Despite steady growth and continuous reforms since the Nineties, Indian economy is still mired in bureaucratic hurdles from coast to coast. This was confirmed by a World Bank report published in late 2006 ranking Pakistan (at 74th) well ahead of India (at 134th) based on ease of doing business.

The Union government treasury reported annual revenue of £51-52 billion in 2005 thus registering an average annual growth of almost 22 per cent since 2000. India imported about 85 per cent of oil and 22 per cent of gas consumption by 2003.

(source:wikipedia)

Renminbi

The Renminbi (RMB) (sign: ¥; code: CNY) is the official currency of the People's Republic of China (PRC), whose principal unit is the Yuan. The currency is legal tender in mainland China, but not in Hong Kong and Macau.

Renminbi (simplified Chinese: 人民币; traditional Chinese: 人民幣; pinyin: rénmínbì; literally "people's currency"). The renminbi is issued by the People's Bank of China, the monetary authority of the PRC. At the moment it is mainly a domestic currency as it is not a free floating currency however given the size of the Chinese economy and its rapid growth, it is touted to become one of the major media of exchange.

A yuán (元) is also known colloquially as a kuài (块 - "lump", originally of silver). One yuán is divided into 10 jiǎo (角) or colloquially máo (毛 - "feather"). One jiǎo is divided into 10 fēn (分). In Cantonese, widely spoken in Guangdong, Hong Kong and Macau, kuài, jiǎo, and fēn are called mān (蚊), hòuh (毫), and sīn (仙), respectively. Sīn is a word borrowed into Cantonese from the English cent.

Etymology

 Chinese yuan

A variety of currencies circulated in China during the Republic of China (ROC) era, most of which were denominated in the unit "yuán" (pronounced [ɥɛn˧˥]). Each was distinguished by a currency name, such as the fabi ("legal tender"), the "gold yuan", and the "silver yuan". The word yuan in Chinese literally means round, after the shape of the coins. The Korean and Japanese currency units, won and yen respectively, are cognates of the yuan and have the same Chinese character (hanja/kanji) representation, but in different forms (respectively, 원/圓 and 円/圓), also meaning round in Korean and Japanese. However, they do not share the same names for the subdivisions. See also New Taiwan dollar, referred to as 元 or 圓 (both pronounced [jʏɛn˧˥]), for the currency of the Republic of China.

As the Communist Party of China took control of ever larger territories in the latter part of the Chinese Civil War, its People's Bank of China began in 1948 to issue a unified currency for use in Communist-controlled territories. Also denominated in yuan, this currency was identified by different names, including "People's Bank of China banknotes" (simplified Chinese: 中国人民银行钞票; traditional Chinese: 中國人民銀行鈔票; from November 1948), "New Currency" (simplified Chinese: 新币; traditional Chinese: 新幣; from December 1948), "People's Bank of China notes" (simplified Chinese: 中国人民银行券; traditional Chinese: 中國人民銀行券; from January 1949), "People's Notes" (人民券, as an abbreviation of the last name), and finally "People's Currency", or "renminbi", from June 1949.

Production and minting

A display in a Chinese bank detailing how to discern genuine 100 and 20 RMB notes from counterfeit versions.

Renminbi currency production is carried about by a state owned corporation, China Banknote Printing and Minting (CBPMC; 中国印钞造币总公司) headquartered in Beijing. CBPMC uses several printing and engraving and minting facilities around the country to produce banknotes and coins for subsequent distribution. Banknote printing facilities are based in Beijing, Shanghai, Chengdu, Xi'an, Shijiazhuang, and Nanchang. Mints are located in Nanjing, Shanghai, and Shenyang. Also, high grade paper for the banknotes is produced at two facilities in Baoding and Kunshan. The Baoding facility is the largest facility in the world dedicated to developing banknote material according to its website. In addition, the People's Bank of China has its own printing technology research division that researches new techniques for creating banknotes and making counterfeiting more difficult.

First series

The first series of renminbi banknotes was introduced by the People's Bank of China in December 1948, about a year before the establishment of the People's Republic of China. It was issued only in paper money form and replaced the various currencies circulating in the areas controlled by the communists. One of the first tasks of the new government was to end the hyperinflation that had plagued China in the final years of the Kuomintang (KMT) era. That achieved, a revaluation occurred in 1955, at the rate of 1 new yuan = 10,000 old yuan.

Banknotes

 First series of the renminbi

On December 1, 1948, the newly founded People's Bank of China introduced notes in denominations of 1, 5, 10, 20, 50, 100 and 1000 yuan. Notes for 200, 500, 5000 and 10,000 yuan followed in 1949, with 50,000 yuan notes added in 1950. A total of 62 different designs were issued. The notes were officially withdrawn on various dates between April 1, 1955 to May 10, 1955.

These first renminbi notes were printed with the words "People's Bank of China", "Republic of China", and the denomination, written in Chinese characters by Dong Biwu.

The name "renminbi" was first recorded as an official name in June 1949. After work began in 1950 to design the second series of the renminbi, the previous series were retroactively dubbed the "first series of the renminbi".

Second - fifth series

The second series of renminbi banknotes was introduced in 1955. During the era of the command economy, the value of the renminbi was set to unrealistic values in exchange with western currency and severe currency exchange rules were put in place. With the opening of the mainland Chinese economy in 1978, a dual-track currency system was instituted, with renminbi usable only domestically, and with foreigners forced to use foreign exchange certificates. The unrealistic levels at which exchange rates were pegged led to a strong black market in currency transactions.

In the late 1980s and early 1990s, the PRC worked to make the RMB more convertible. Through the use of swap centres, the exchange rate was brought to realistic levels and the dual track currency system was abolished.

The renminbi is convertible on current accounts but not capital accounts. The ultimate goal has been to make the RMB fully convertible. However, partly in response to the Asian financial crisis in 1998, the PRC has been concerned that the mainland Chinese financial system would not be able to handle the potential rapid cross-border movements of hot money, and as a result, as of 2007, the currency trades within a narrow band specified by the Chinese central government.

The fen and jiao have become increasingly unnecessary as prices have increased. Chinese retailers tend to avoid decimal values (such as ¥9.99), opting instead for integer values of yuan (such as ¥9 or ¥10).

Coins

In 1955, aluminium 1, 2 and 5 fen coins were introduced. In 1980, brass 1, 2, and 5 jiao and cupro-nickel 1 yuan coins were added, although the 1 and 2 jiao were only produced until 1981, with the last 5 jiao and 1 yuan issued in 1985. In 1991, a new coinage was introduced, consisting of an aluminium 1 jiao, brass 5 jiao and nickel-clad-steel 1 yuan. Issuance of the 1 and 2 fen coins ceased in 1991, with that of the 5 fen halting a year later. The small coins were still made for annual mint sets, and from the beginning of 2005 again for general circulation. New designs of the 1 and 5 jiao and 1 yuan were introduced in between 1999 and 2002.

The use of coins varies from place to place. For example, coins are more often used for values less or equal to 1 yuan in Shanghai and Shenzhen but banknotes of the lower value are more often used than coins in Beijing and Xi'an]. Coins are used far less than banknotes in China nowadays. Use of coins in self-service ticket vending machines at metro stations may have contributed to the relatively frequent use of coins in Shanghai.

Banknotes

"People's Bank of China" written in 5 different languages. From top to bottom and left to right: Mandarin pinyin, Mongol, Tibetan, Uyghur, and Zhuang languages.

In 1955, notes (dated 1953), were introduced in denominations of 1, 2 and 5 fen, 1, 2 and 5 jiao, and 1, 2, 3, 5 and 10 yuan. Except for the three fen denominations and the 3 yuan, notes in these denominations continue to circulate, with 50 and 100 yuan notes added in 1980 and 20 yuan notes added in or after 1999.

The denomination of each banknote is printed in Chinese. The numbers themselves are printed in financial Chinese numeral characters, as well as Arabic numerals. The denomination and the words "People's Bank of China" are also printed in Mongol, Tibetan, Uyghur and Zhuang on the back of each banknote. The right front of the note has a tactile representation of the denomination in Chinese braille starting from the fourth series.

Collection of Chinese yuan (renminbi) banknotes. 1⁄10 yuan to 10 yuan notes are of the fourth series of the renminbi. 20 to 100 yuan (red) are of the fifth series of the renminbi. The polymer note on the lower right commemorates the third millennium.

Second series

 Second series of the renminbi

The second series of renminbi banknotes (the first having been issued for the previous currency) was introduced on 1 March 1955. Each note has the words "People's Bank of China" as well as the denomination in the Uyghur, Tibetan, Mongol and Zhuang languages on the back, which has since appeared in each series of renminbi notes. The denominations available in banknotes were ¥0.01, ¥0.02, ¥0.05, ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥3, ¥5 and ¥10.

Third series

Third series of the renminbi

The third series of renminbi banknotes was introduced on April 15, 1962. For the next two decades, the second and third series banknotes were used concurrently. The denominations were of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5 and ¥10. The third series was phased out during the 1990s and then was recalled completely on July 1, 2000.

Fourth series

Fourth series of the renminbi

The fourth series was introduced between 1987 and 1997, although the banknotes were dated 1980, 1990, or 1996. They are still legal tender. Banknotes are available in denominations of ¥0.1, ¥0.2, ¥0.5, ¥1, ¥2, ¥5, ¥10, ¥50 and ¥100.

Fifth series

Fifth series of the renminbi

In 1999, a new series of renminbi banknotes and coins was progressively introduced. The fifth series consists of banknotes for ¥1, ¥5, ¥10, ¥20, ¥50 and ¥100. Significantly, the fifth series uses the portrait of Mao Zedong on all banknotes, in place of the various leaders and workers which had been featured previously.

Commemorative designs

In 1999, a commemorative red ¥50 note was issued in honor of the 50th anniversary of the establishment of the People's Republic of China. This note features Mao Zedong on the front and various animals on the back.

An orange polymer note, and so far, China's only polymer note, commemorating the new millennium was issued in 2000 with a face value of ¥100. This features a dragon on the obverse and the reverse has a sundial.

For the 2008 Beijing Olympics, a green ¥10 note was issued featuring the Bird's Nest on the front with the back showing a classical Olympic discus thrower and various other athletes.

Possible future design

On March 13, 2006, some delegates to an advisory body at the National People's Congress proposed to include Sun Yat-sen and Deng Xiaoping on the renminbi banknotes. However, the proposal is a long way from becoming law.

International use

The People's Republic of China has made tentative steps toward establishment of the renminbi as an international currency using Hong Kong as a launching pad where currency restrictions regarding renminbi denominated bank deposits and financial products were greatly liberalized in July, 2010. In 2010 renminbi denominated bonds were reported to have been purchased by Malaysia's central bank and that McDonald's had issued renmimbi denominated corporate bonds through Standard Chartered Bank of Hong Kong.

Use as a currency outside China

The two special administrative regions, Hong Kong and Macau, have their own respective currencies. According to the "one country, two systems" principle and the basic laws of the two territories, national laws generally do not apply. Therefore, the Hong Kong dollar and the Macanese pataca remain the legal tenders in the two territories, and renminbi, although sometimes accepted, is not legal tender. Banks in Hong Kong allow people to maintain accounts in RMB.

The RMB had a presence in Macau even before the 1999 return to the People's Republic of China from Portugal. Banks in Macau can issue credit cards based on the renminbi but not loans. Renminbi based credit cards cannot be used in Macau's casinos.

The current Republic of China government in Taiwan believes wide usage of the renminbi would create an underground economy and undermine its sovereignty. Tourists are allowed to bring in up to 20,000 renminbi when visiting Taiwan. These renminbi must be converted to the New Taiwan dollar at trial exchange sites in Matsu and Kinmen. The Chen Shui-bian administration insisted that it would not allow full convertibility until the mainland signs a bilateral foreign exchange settlement agreement, though president Ma Ying-jeou has pledged to allow full convertibility as soon as possible.

The renminbi is circulated in some of China's neighbors, such as Pakistan, Mongolia and northern part of Thailand. Cambodia welcomes the renminbi as an official currency and Laos and Myanmar allow it in border provinces. Though unofficial[clarification needed], Vietnam recognizes the exchange of the renminbi to the đồng.

Value

 Renminbi currency value

For most of its early history, the RMB was pegged to the U.S. dollar at 2.46 yuan per USD (note: during the 1970s, it was appreciated until it reached 1.50 yuan per USD in 1980). When China's economy gradually opened in the 1980s, the RMB was devalued in order to improve the competitiveness of Chinese exports. Thus, the official RMB/USD exchange rate declined from 1.50 yuan in 1980 to 8.62 yuan by 1994 (lowest ever on the record). Improving current account balance during the latter half of the 1990s enabled the Chinese government to maintain a peg of 8.27 yuan per USD from 1997 to 2005.

As of August 2, 2010, the yuan is valued at 14.7 US cents (or 6.796 per US dollar),which is €0.112 (or 8.89794 per euro).

Depegged from the U.S. dollar

On July 21, 2005, the peg was finally lifted, which saw an immediate one-off RMB revaluation to 8.11 per USD. The exchange rate against the euro stood at 10.07060 yuan per euro.

However the peg was reinstituted unofficially when the financial crisis hit: "Under intense pressure from Washington, China took small steps to allow its currency to strengthen for three years starting in July 2005. But China "re-pegged" its currency to the dollar as the financial crisis intensified in July 2008." 

On June 19, 2010, the People’s Bank of China released a statement simultaneously in Chinese and English indicating that they would "proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility."  The news was greeted with praise by world leaders including Barack Obama, Nicolas Sarkozy and Stephen Harper. The PBoC maintained there would be no "large swings" in the currency. The RMB rose to its highest level in five years and markets worldwide surged on Monday, June 21 following China's announcement.

However China has simply shifted their reserves from dollar accounts to accounts in their competitor nations, leading these other nations to invest in dollars to keep their own currencies down. The result has been an international currency war.

Managed Float

The RMB is now moved to a managed floating exchange rate based on market supply and demand with reference to a basket of foreign currencies. The daily trading price of the U.S. dollar against the RMB in the inter-bank foreign exchange market would be allowed to float within a narrow band of 0.3% around the central parity published by the People's Bank of China (PBC); in a later announcement published on May 18, 2007, the band was extended to 0.5%. The PRC has stated that the basket is dominated by the United States dollar, Euro, Japanese yen and South Korean won, with a smaller proportion made up of the British pound, Thai baht, Russian ruble, Australian dollar, Canadian dollar and Singapore dollar.

On April 10, 2008, it traded at 6.9920 yuan per US dollar, which is the first time in more than a decade that a dollar bought less than seven yuan,. and at 11.03630 yuan per euro.

Beginning in January 2010, Chinese and non-Chinese citizens have an annual quota to change a maximum of 50,000 USD. Exchange will only proceed if the applicant appears in person at the relevant bank and presents his passport or his Chinese ID; these deals are being centrally registered. The maximum withdrawal is 10,000 USD per day, the maximum purchase quota of USD is 500 per day. This stringent management of the currency leads to a bottled-up demand for exchange in both directions. It is viewed as a major tool to keep the currency peg, preventing inflows of 'hot money'.

A shift of Chinese reserves into the currencies of their other trading partners has caused these nations to shift more of their reserves into dollars, leading to no great change in the value of the Renminbi against the dollar.

Futures market

Renminbi futures are traded at the Chicago Mercantile Exchange. The futures are cash-settled at the exchange rate published by the People's Bank of China.

Purchasing power parity

Scholarly studies suggest that the yuan is undervalued on the basis of purchasing power parity analysis.

The World Bank estimated that, by purchasing power parity, one International dollar was equivalent to approximately RMB1.9 in 2004.

The International Monetary Fund estimated that, by purchasing power parity, one United States dollar was equivalent to approximately RMB3.462 in 2006, RMB3.621 in 2007, and RMB3.798 in 2008.

(source:wikipedia)

Economy of the United Kingdom

The economy of the United Kingdom is the world's sixth-largest national economy measured by both nominal GDP and purchasing power parity (PPP). The UK has the third-largest national economy in Europe measured by nominal GDP (after Germany and France) and the second-largest measured by PPP (after Germany). Its GDP per capita is ranked the 20th highest in the world in nominal terms and the 17th highest in PPP terms. The UK is a member of the Commonwealth of Nations, the European Union, 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 British economy is made up (in descending order of size) of the economies of England, Scotland, Wales and Northern Ireland.

In the 18th century the UK was the first country in the world to industrialise, and for much of the 19th century possessed a predominant role in the global economy.However, by the late 19th century, the Second Industrial Revolution in the United States and the German Empire caused an increasing challenge to Britain's role as the leader of the global economy. The costs of fighting both the First World War and the Second World War further weakened the relative economic position of the UK, and by 1945 Britain had been superseded by the United States as the chief player in the global economy. However, the UK still maintains a significant role in the world economy.

The UK is one of the world's most globalised countries. London is the world's largest financial centre alongside New York, has the largest city GDP in Europe and is home to the headquarters of more than 100 of Europe's 500 largest companies. The aerospace industry of the UK is the second- or third-largest aerospace industry in the world, depending upon the method of measurement. The British economy is boosted by North Sea oil and gas reserves, overall worth an estimated £250 billion in 2007.

The UK entered its worst recession since World War 2 in 2008. However the UK economy grew by 1.2 per cent in Q2 of 2010 and 0.8 per cent in Q3, the fastest consecutive growth in over 10 years, accelerating from the 0.4 per cent growth recorded in Q1 of 2010 and 0.4 per cent growth in Q4 of 2009. The U.K. economy has grown 2.8% since the end of the recession; the UK economy has recovered twice as fast as expected so far. The UK is currently ranked fourth in the world (and first in Europe) in the World Bank's Ease of Doing Business Index.

History

Economic history of the United Kingdom

Post-war recovery

Following the end of World War II, there was a long interval without a major recession (1945–1973) and a growth in prosperity in the 1950s and 1960s. According to the OECD, the annual rate of growth (percentage change) between 1960 and 1973 averaged 2.9%, although this figure was far behind the rates of other European countries such as France, West Germany and Italy.

However, following the severe shock of the 1973 oil crisis and the 1973–1974 stock market crash, the British economy had fallen into recession by the time Edward Heath's Conservative Party government had been ousted by the Labour Party as Harold Wilson moved into office for the second time. GDP had fallen by 1.1%, recording weaker growth than other European nations in the 1970s overall; even when the recession ended in 1975, the economy was still blighted by double-digit inflation and unemployment was rising, though the figures levelled off by the election of 1979.

Neoliberalism

However, the 1980s saw a strong reversal of fortunes for the British economy. A new period of neo-liberal economics began with the advent of the government of Margaret Thatcher who was elected in 1979. Most state-owned enterprises in the industrial and service sectors, which since the 1940s had been nationalised, were privatised. As a result, the British Government owned very few industries or businesses by the mid 1980s. GDP fell 5.9% at first then rose to 5% at its peak in 1988, according to the IMF, one of the highest rates of any European nations. as banks and other financial institutions in the UK enjoyed the liberalisation of the regulatory structures and greater freedom to explore new investment vehicles with less oversight. However, Mrs Thatcher's modernisation of the British economy was far from trouble free; her battle against inflation resulted in mass unemployment with the jobless count passing 3,000,000 by the start of 1982 and remaining above that level until the spring of 1987. This was largely due to the closure of many outdated factories and coalpits which were inefficient and no longer viable to keep open. Unemployment peaked at nearly 3,300,000 during 1984 but fell dramatically during the final three years of the decade, standing at just over 1,500,000 by the end of 1989. 

Another severe recession hit the British economy at the start of the 1990s, beginning in the summer of 1990 and lasting until the end of 1992. This recession was a global one, brought on by the savings and loan crisis in the United States of America, which caused the economy to shrink by 8%, while unemployment increased from around 1,700,000 at the start of the recession to nearly 3,000,000 at the end of it. The recession ended at the turn of 1993 and subsequent economic recovery was extremely strong. Furthermore, unlike the previous recession, there was a practically instant and substantial fall in unemployment, though it was not enough to prevent the Tory government (led since November 1990 by John Major) from a landslide election defeat to Tony Blair's Labour in May 1997. 

Blair was in power for 10 years and during his rule he saw 40 successive quarters of economic growth. In the second quarter of 2008, the economy finally endured a quarter of detraction. The previous 15 years had seen one of the highest economic growth rates of major developed economies during that time and certainly the strongest of any European nation. 

GDP growth had briefly reached 4% in the early 1990s, gently declining thereafter. Peak growth was relatively anaemic compared to past rates of growth, such as the 6.5% peak in the early 1970s, although over-all growth was more sustained than earlier. Annual growth rates averaged 2.68% between 1992-2007 according to the IMF, with the finance sector growth contributing a greater part than previously.

This boom ended in 2008 when the United Kingdom suddenly entered a recession brought about by the global financial crisis. Beginning with the collapse of Northern Rock, which was taken into public ownership in February 2008, other banks had to be partly nationalised. The Royal Bank of Scotland Group, which at its peak was the second largest bank in the UK and the fifth largest in the world by market capitalisation, was effectively nationalised on 13 October 2008, when the British Government announced it would take a stake of up to 58% in the Group. By mid 2009, the HM Treasury had a 70.33% controlling shareholding in RBS, and a 43% shareholding through UK Financial Investments Limited of Lloyds Banking Group, formerly the fifth largest banking group in the UK. This recession has seen unemployment rise substantially, from just over 1,600,000 in January 2008  to nearly 2,500,000 in October 2009 yet less so when compared to countries such as Germany, France or Spain.

The UK economy had been one of the strongest EU economies in terms of inflation, interest rates and unemployment, all of which remained relatively low until the 2008-09 recession. Unemployment has since reached a peak of just under 2.5 million (7.8%), the highest level since early 1990s although this rate remains far lower than many other European nations. However, interest rates have been slashed to 0.5%. In 2007, according to the International Monetary Fund, the United Kingdom had the ninth highest level of GDP per capita in the European Union in terms of purchasing power parity, after Luxembourg, Ireland, the Netherlands, Austria, Denmark, Sweden, Belgium and Finland. However, in common with the economies of other English-speaking countries, it has higher levels of income inequality than many European countries. During August 2008 the IMF warned that the UK economic outlook had worsened due to a twin shock: financial turmoil as well as rising commodity prices. Both developments harm the UK more than most developed countries, as the UK obtains revenue from exporting financial services while recording deficits in finished goods and commodities, including food.

In 2007, the UK had the world's third largest current account deficit, despite significant oil revenues, according to the IMF. This was mainly the result of a large deficit in the trade in manufactured goods. During May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance. Although the UK's "labour productivity per person employed" has been progressing well over the last two decades and has overtaken productivity in the united Germany, it lags around 20% behind France's level, where workers have a 35-hour working week. The UK's "labour productivity per hour worked" is currently on a par with the average for the "old" EU (15 countries). The United Kingdom currently ranks 21st on the Human Development Index.

Recent

UK exports of goods in 2005

The UK entered a recession in Q2 of 2008, according to the UK Office of National Statistics (ONS) and exited it in Q4 of 2009. The revised ONS figures of November 2009 showed that the UK had suffered six consecutive quarters of negative growth. As of the end of November 2009, the economy had shrunk by 4.9%, making the 2008-2009 recession the longest since records began. In December 2009, the Office of National Statistics revised figures for the third quarter of 2009 showed that the economy shrank by 0.2%, compared to a 0.6% fall the previous quarter.

On 23 January 2009, Government figures from the Office for National Statistics showed that the UK was officially in recession for the first time since 1991. It entered a recession in the final quarter of 2008, accompanied by rising unemployment which increased from 5.2% in May 2008 to 7.6% in May 2009. The unemployment rate among 18 to 24-year-olds has risen from 11.9% to 17.3%. Though initially Britain lagged behind other major economies including Germany, France, Japan, and the US which all returned to growth in the second quarter of 2009, the country eventually returned to growth in the last quarter of 2009. On January 26, 2010, it was confirmed that the U.K. had left its recession, the last major economy in the world to do so  In the 3 months to February 2010 the U.K. economy grew yet again by 0.4%  In Q2 of 2010 the economy grew by 1.2% the fastest rate of growth in 9 years, in Q3 of 2010 figures released showed the UK economy grew by 0.8%; this was the fastest Q3 growth in 10 years.

UK exports of services in 2005

It has been suggested that the UK initially lagged behind its European neighbours because the UK entered the 2008 recession later. However, German GDP fell 4.7% year on year compared to the UK's 5.1%, and Germany has now posted a second quarterly gain in GDP. Commentators suggest that the UK suffered a slightly longer recession than other large European countries, as a result of government policy dating back to the policies of the Thatcher government of 1979, in which UK governments have moved away from supporting manufacturing and focused on the financial sector. The OECD predicts that the UK will grow 1.6% in 2010. The unemployment rate recorded by the Labour Force Survey fell in the fourth quarter of 2009, the first of the big 3 economies in the EU to do so. Gross Domestic Product (GDP) decreased by a (second revision) figure of 0.2 per cent in the third quarter of 2009, after a decrease of 0.6 per cent in the second quarter, according to the Office for National Statistics (ONS). There was a 2.4% decline in the first quarter of 2009. The economy has now contracted 5.9% from its peak before the recession began, the BBC reports.

In October 2007, the International Monetary Fund (IMF) had forecast British GDP to grow by 3.1% in 2007 and 2.3% in 2008. However, GDP growth slowed to a fall of 0.1% in the April–June (second) quarter of 2008 (revised down from zero). In September 2008, the OECD forecast contraction for at least two quarters for the UK economy, possibly severe, placing its predicted performance last in the G7 of leading economies. Six quarters later the UK economy was still contracting, placing a question mark over OECD forecasting methods.

It has been argued that heavy government borrowing over the past cycle has led to a severe structural deficit, reminiscent of previous crises, which will inevitably exacerbate the situation and place the UK economy in an unfavourable position compared to its OECD partners as attempts are made to stimulate recovery, other OECD nations having allowed greater room for manoeuvre thanks to contrasting policies of relatively tighter fiscal control prior to the global downturn.

In May 2009 the European Commission (EC) stated: "The UK economy is now clearly experiencing one of its worst recessions in recent history." The EC expected GDP to decline 3.8pc in 2009 and projected that growth will remain negative for the first three quarters of 2009. It predicted two quarters of "virtual stagnation" in late 2009-early 2010, followed by a gradual return to "slight positive growth by late 2010".

The FTSE 100 and FTSE 250 rose to their highest levels in a year on the 9th of September 2009 with the FTSE 100 breaking through 5,000 and the FTSE 250 breaking through 9,000. On the 8th of September the National Institute of Economic and Social Research believed that the economy had grown by 0.2% in the three months to August, but was proved wrong. In its eyes the UK recession was officially over, although it did warn that "normal economic conditions" had not returned. On the same day, figures also showed UK manufacturing output rising at its fastest rate in 18 months in July. On the 15th of September 2009 the EU incorrectly predicted the UK is expected to grow by 0.2% between July and September, on the same day the governor of the Bank of England, Mervyn King said the UK GDP is now growing.[ Unemployment has recently fallen in Wales.

Many commentators in the UK were certain that the UK would leave recession officially in Q3, believing that all the signs showed that growth was extremely likely, although in fact government spending had been insufficient to rescue the economy from recession at that point. Figures in fact showed no growth in retail sales in September 2009, and a 2.5% decline in industrial output in August. The revised UK figures confirmed that the economy shrank in Q3 of 2009 by 0.2%, although government spending on cash for the car scrappage scheme helped. Yet this temporary lapse was followed by a solid 0.4% growth in the Q4. UK manufacturers' body, the EEF, appealed for more cash from the government: "Without an extension of support for business investment in the pre-Budget statement next month, it will be difficult to see where the momentum for growth will come from." 

Moody's, an American credit rating organisation, gave the UK an AAA credit rating in September 2010, forecasting stable finances largely driven by governmental action. It also reported that the economy is flexible to grow in the future and that household debts and poor exports were large growth-reducing factors, as well as its financial sector.

Macroeconomic trend

This is a table of the trend of gross domestic product of United Kingdom at market prices estimated by the International Monetary Fund with figures in millions of pounds sterling.

Year Gross domestic product US dollar exchange Inflation index

(2000=100) Per Capita Income

(as % of USA)

1925 4,466 £0.21 3 61.79

1930 4,572 £0.21 3 66.08

1935 4,676 £0.20 2 85.67

1940 7,117 £0.26 3 74.28

1945 9,816 £0.25 4 50.93

1950 13,162 £0.36 5 38.26

1955 19,264 £0.36 6 42.54

1960 25,678 £0.36 7 47.86

1965 35,781 £0.36 9 49.96

1970 51,515 £0.42 11 44.04

1975 105,773 £0.45 20 55.54

1980 230,695 £0.42 43 78.57

1985 354,952 £0.77 60 46.84

1990 557,300 £0.56 76 76.62

1995 718,383 £0.63 92 71.84

2000 953,576 £0.65 100 72.29

2005 1,209,334 £0.54 107 90.17

Wikinews has related news: UK enters recession

For purchasing power parity comparisons, the US Dollar is exchanged at £0.66.

Sectors

Agriculture, hunting, forestry, and fishing

Agriculture in the United Kingdom and Forestry in the United Kingdom

Agriculture is intensive, highly mechanised, and efficient by European standards, producing about 60% of food needs, with less than 1.6% of the labour force (535,000 workers). It contributes around 0.6% of British national value added. Around two-thirds of the production is devoted to livestock, one-third to arable crops. Agriculture is subsidised by the European Union's Common Agricultural Policy.

The UK retains a significant, though reduced, fishing industry. Its fleets, based in towns such as Kingston upon Hull, Grimsby, Fleetwood, Great Yarmouth, Peterhead, Fraserburgh, and Lowestoft, bring home fish ranging from sole to herring.

The Blue Book 2006 (page 110) reports that the "Agriculture hunting, forestry and fishing" added gross value of £10,323 million (at 2006 prices) to the UK economy in 2004.

Construction

Construction industry of the United Kingdom

The Blue Book 2006 reports that this industry added gross value of £64,747 million to the UK economy in 2004. It is the fastest growing sector of the economy - after the 2010 Recession.

Production industries

Electricity, gas and water supply

Energy in the United Kingdom

The Blue Book 2006 reports that this sector added gross value of £17,103 million to the UK economy in 2004. The United Kingdom is expected to launch the building of new nuclear reactors to replace existing generators and to boost UK's energy reserves.

Manufacturing

 Manufacturing in the United Kingdom

Rolls-Royce Trent 900 engine

In 2003, manufacturing industry accounted for 16% of national output in the UK and for 13% of employment. This is a continuation of the steady decline in the importance of this sector to the British economy since the 1960s, although the sector is still important for overseas trade, accounting for 83% of exports in 2003. Manufacturing is an important sector of the modern British economy and there is a considerable amount of published research on the subject of the factors affecting its growth and performance. After the 2010 Recession it is one of the fastest growing sectors of the economy - experiencing a mini-boom.

The aerospace industry of the UK is the second- or third-largest aerospace industry in the world, depending upon the method of measurement. The industry employs around 113,000 people directly and around 276,000 indirectly and has an annual turnover of around £20 billion. British companies with a major presence in the industry include BAE Systems (the world's second-largest defence contractor) and Rolls-Royce (the world's second-largest aircraft engine maker). Foreign aerospace companies active in the UK include EADS and its Airbus subsidiary, which employs over 13,000 in the UK.

The pharmaceutical industry employs around 67,000 people in the UK and in 2007 contributed £8.4 billion to the UK's GDP and invested a total of £3.9 billion in research and development. In 2007 exports of pharmaceutical products from the UK totalled £14.6 billion, creating a trade surplus in pharmaceutical products of £4.3 billion. The UK is home to GlaxoSmithKline and AstraZeneca, respectively the world's third- and seventh-largest pharmaceutical companies.

The British motor industry remains a significant part of the sector, although it has diminished with the collapse of the MG Rover Group and most of the industry is foreign owned.

Mining and quarrying

 Mining in the United Kingdom and North Sea oil

Kellingley Colliery lies on the border of North and West Yorkshire. Although coal mining has been scaled back in the UK, it is still prevalent in these areas.

The UK has a small coal reserve along with significant, yet continuously decliningnatural gas and oil reserves. Over 400 million tonnes of proven coal reserves have been identified in the UK. Coal mining was a significant part of the UK economy, however scaling back in the industry during the 1980s and 1990s means that it now only exists in Warwickshire and Yorkshire. In 2004, total UK coal consumption (including imports) was 61 million tonnes, allowing the UK to be self sufficient in coal for just over 6.5 years, although at present extraction rates it would take 20 years to mine. The Blue Book 2006 reports that this sector added gross value of £21,876 million to the UK economy in 2004.

An alternative to coal-fired electricity generation is underground coal gasification (UCG). UCG involves injecting steam and oxygen down a borehole, which extracts gas from the coal and draws the mixture to the surface—a potentially very low carbon method of exploiting coal. Identified onshore areas that have the potential for UGC amount to between 7 billion tonnes and 16 billion tonnes. Based on current UK coal consumption, these volumes represent reserves that could last the UK between 200 and 400 years.

Service industries

The service sector is the dominant sector of the UK economy, a feature normally associated with the economy of a developed country, and makes up about 73% of GDP. This means that the Tertiary sector jobs outnumber the Secondary and Primary sector jobs. The service sector is dominated by financial services, especially in banking and insurance. London is a major centre for international business and commerce and is the leader of the three "command centres" for the global economy (along with New York City and Tokyo). It is also a major legal centre, with four of the six largest law firms in the world headquartered there.

Many multinational companies that are not primarily UK-based have chosen to site their European or rest-of-world headquarters in London: an example is the US financial services firm Citigroup. The creative industries accounted for 7% GVA in 2005 and grew at an average of 6% per annum between 1997 and 2005.

Tourism is very important to the British economy. With over 27 million tourists arriving in 2004, the United Kingdom is ranked as the sixth major tourist destination in the world. London, by a considerable margin, is the most visited city in the world with 15.6 million visitors in 2006, ahead of 2nd placed Bangkok (10.4 million visitors) and 3rd placed Paris (9.7 million).

Education, health and social work

Main articles: Education in the United Kingdom and Healthcare in the United Kingdom

In 2008 the education, health and social work sector had a total gross value added of around £170.3 billion, of which around £145 billion was compensation to employees. In 2008 the sector had a total gross capital formation of around £17.7 billion.

In 2008 health and social work had a gross value added of around £93.7 billion. In the UK the majority of the heathcare sector consists of the state funded and operated National Health Service (NHS), which accounts for over 80% of all healthcare spending in the UK and has a workforce of around 1.5 million, making it the largest employer in Europe. The NHS operates independently in each of the four constituent countries of the UK. The NHS in England is by far the largest of the four parts and had a turnover of £92.5 billion in 2008.

In 2008 education had a gross value added of around £76.4 billion.

Financial and business services

The City of London is the world's largest financial centre alongside New York

London is a global hub for financial services and commerce, ranking top along-side New York on the Global Financial Centres Index for competitiveness. Based on two districts, the country's capital houses 'The City' (the City of London) and the Docklands (particularly around Canary Wharf). The City houses the London Stock Exchange (shares and bonds), London Metal Exchange (base metal and plastic futures), Lloyds of London (insurance), and the Bank of England. The Docklands began development in the 1980s and is now home to the Financial Services Authority and financial institutions (such as Barclays Bank, Citigroup and HSBC). There are now over 500 banks with offices in the City and Docklands, with most business in London being conducted on an international basis, with established leads in areas such as Eurobonds, foreign exchange markets, energy futures and global insurance. It is also home to the London International Financial Futures and Options Exchange and the Lloyd's of London insurance market. The Alternative Investments Market has acted a growth market over the past decade, allowing London to expand as an international equity centre for smaller firms. The United Kingdom' financial exports contribute significantly towards the balance of payments. The UK has had an expanding export business in financial services, at least partly due to a regulatory structure the Government now accepts as inadequate.

Several other major UK cities have large financial sectors and related services, most notably Leeds, which is now the UK's largest centre for business and financial services outside London, and the largest legal centre outside London, as well as Edinburgh, which has one of the large financial centres of Europe and is the headquarters of the Royal Bank of Scotland Group, one of the world's largest banks, and the third largest bank in Europe. It is also the headquarters of HBOS (owners of the Bank of Scotland) and Standard Life Insurance. The Blue Book 2006 reports that this industry added gross value of £86,145 million to the UK economy before adjustment of financial services valued at £50,165 million in 2004.

Hotels and restaurants

The Blue Book 2006 reports that this industry added gross value of £33,074 million to the UK economy in 2004.

[edit]Other social and personal services

This sector includes value added by private households with employees and extraterritorial organisations. The Blue Book 2006 reports that this sector added gross value of £55,543 million to the UK economy in 2004.

Public administration and defence

The Blue Book 2006 reports that this sector added gross value of £55,280 million to the UK economy in 2004.

Real estate and renting activities

MediaCityUK in Salford, Greater Manchester

The UK property market boomed for the seven years up to 2008 and in some areas property trebled in value over that period. The increase in property prices had a number of causes: sustained economic growth, low interest rates, the growth in property investment, and planning restrictions on the supply of new housing.

UK property market analysts have revised previously negative assessments of the market, with most subsequently predicting continued modest growth in prices in the mid-term. However, around September 2007, house prices began to fall consistently, arguably contributing to the negative UK economic growth of the 3rd Quarter 2008 .

First-time buyers who currently have assets not consisting of residential property, but with no way of attaining residential property (in some cases at all, and in others without undertaking unsustainable debt amounting to on average up to five times their annual salary), are now better placed to enter the property market.

This sector includes letting of dwellings and other related business support activities. The Blue Book 2006 reports that the lettings industry added gross value of £83,037 million to the UK economy in 2004 while other real estate and business support activities added gross value of £175,333 million.

The paucity of finance available to homebuyers by the self-regulation of the banks following the collapse of the financial system in 2007 continues to contribute to a very much diminished demand for housing in the UK with sales volumes around half of the pre-crash level. With many sellers reluctant to drop their price, there is a chronic over-supply of housing on the market at prices in excess of demand (as of September 2009), leading to the average time on the market for residential property to be over 12 months (well above the long term trend). This situation has arisen partly because of the deferred repayment windows created by the government forcing the courts to delay possession orders. As the regulatory framework of the banks is in concordance with Basel II, then the demand for UK residential property is likely to remain very subdued in comparison to pre credit-crunch lending for many years to come. As the forced sellers in the market increase when the repayment deferrals cease, in combination with other forced sellers (death and divorce), many economists predict that the worst of the crash in UK residential property is yet to be realised. This is in keeping with other major economies that experienced rapid house price growth over the last decade; They have seen larger scale falls in prices that have yet to materialise in the UK, as of September 2009.

Telecommunications in the United Kingdom and Transport in the United Kingdom

Heathrow Terminal 5 building. London Heathrow Airport has the most international passenger traffic of any airport in the world.

The Blue Book 2006 reports that the transport and storage industry added gross value of £49,516 million to the UK economy in 2004 while the communication industry added a gross value of £29,762 million.

The Highways Agency is the executive agency responsible for trunk roads and motorways in England apart from the privately owned and operated M6 Toll. The Department for Transport states that traffic congestion is one of the most serious transport problems and that it could cost England an extra £22 billion in wasted time by 2025 if left unchecked. According to the government-sponsored Eddington report of 2006, congestion is in danger of harming the economy, unless tackled by road pricing and expansion of the transport network.

The Scottish transport network is the responsibility of the Scottish Government's Enterprise, Transport and Lifelong Learning Department with Transport Scotland being the Executive Agency that is accountable to the Cabinet Secretary for Finance and Sustainable Growth for Scotland's trunk roads and rail networks. Scotland's rail network has around 340 railway stations and 3,000 kilometres of track with over 62 million passenger journeys made each year. In 2008, the Scottish Government set out investment plans for the next 20 years, with priorities to include a new Forth Road Bridge and electrification of the rail network.

Across the UK, there is a radial road network of 46,904 kilometres (29,145 mi) of main roads with a motorway network of 3,497 kilometres (2,173 mi). There are a further 213,750 kilometres (132,818 mi) of paved roads. The rail network of 16,116 km (10,072 miles) in Great Britain and 303 route km (189 route mi) in Northern Ireland carries over 18,000 passenger trains and 1,000 freight trains daily. Urban rail networks are well developed in London and other cities. There was once over 48,000 route km (30,000 route mi) of rail network in the UK, however most of this was reduced over a time period from 1955 to 1975, much of it after a report by a government advisor Richard Beeching in the mid 1960s (known as the Beeching Axe). Plans are now being considered to build new high speed lines by 2025.

London Heathrow Airport, located 15 miles (24 km) west of the capital, is the UK's busiest airport and has the most international passenger traffic of any airport in the world. It is the hub for the flag carrier British Airways, as well as Virgin Atlantic, and BMI.

[edit]Wholesale and retail trade

This sector includes the motor trade, auto repairs, personal and household goods industries. The Blue Book 2006 reports that this sector added gross value of £127,520 million to the UK economy in 2004.

Currency

Main article: Pound sterling

The Bank of England; the central bank of the United Kingdom.

London is the world capital for foreign exchange trading. The highest daily volume, counted in trillions of dollars US, is reached when New York enters the trade. The currency of the UK is the pound sterling, represented by the symbol £. The Bank of England is the central bank, responsible for issuing currency. Banks in Scotland and Northern Ireland retain the right to issue their own notes, subject to retaining enough Bank of England notes in reserve to cover the issue. Pound sterling is also used as a reserve currency by other governments and institutions, and is the third-largest after the U.S. dollar and the euro.

The UK chose not to join the euro at the currency's launch. The government of former Prime Minister Tony Blair had pledged to hold a public referendum for deciding membership should "five economic tests" be met. Until relatively recently there was debate over whether or not the UK should abolish its currency Pound Sterling and join the Euro. In 2007 the British Prime Minister, Gordon Brown, pledged at the time to hold a public referendum based on certain tests he set as Chancellor of the Exchequer. When assessing the tests, Gordon Brown concluded that while the decision was close, the United Kingdom should not yet join the Euro. He ruled out membership for the foreseeable future, saying that the decision not to join had been right for Britain and for Europe.] In particular, he cited fluctuations in house prices as a barrier to immediate entry. Public opinion polls have shown that a majority of Britons have been opposed to joining the single currency for some considerable time and this position has now hardened further. In 2005, more than half (55%) of the UK were against adopting the currency, while 30% were in favour. The current government, a Conservative and Liberal Democrat coalition, is opposed to membership.

Exchange rates

(average for of each year), in USD (US dollar) and EUR (euro) per GBP; and inversely: GBP per USD and EUR. (Synthetic Euro XEU before 1999). Caution: these averages conceal wide intra-year spreads. The coefficient of variation gives an indication of this. It also shows the extent to which the pound tracks the euro or the dollar. Note the effect of Black Wednesday in late 1992 by comparing the averages for 1992 with the averages for 1993.

Year £/USD USD/£ C.Var £/XEU XEU/£ C.Var

1990 £0.5633 $1.775 £0.7161 1.397

1991 £0.5675 $1.762 £0.7022 1.424

1992 £0.5699 $1.755 £0.7365 1.358

1993 £0.6663 $1.501 £0.7795 1.283

1994 £0.6536 $1.530 £0.7742 1.292

1995 £0.6338 $1.578 £0.8200 1.220

1996 £0.6411 $1.560 £0.8029 1.245

1997 £0.6106 $1.638 £0.6909 1.447

1998 £0.6037 $1.656 £0.6779 1.475

Year £/USD USD/£ C.Var £/EUR EUR/£ C.Var

1999 £0.6185 $1.617 £0.6595 €1.516

2000 £0.6609 $1.513 £0.6099 €1.640

2001 £0.6943 $1.440 £0.6223 €1.607

2002 £0.6664 $1.501 £0.6289 €1.590

2003 £0.6123 $1.633 £0.6924 €1.444

2004 £0.5461 $1.832 2.26% £0.6787 €1.474 1.92%

2005 £0.5500 $1.820 3.47% £0.6842 €1.462 1.27%

2006 £0.5435 $1.842 3.79% £0.6821 €1.466 1.11%

2007 £0.4999 $2.001 1.97% £0.6848 €1.461 2.40%

2008 £0.5499 $1.835 tbc £0.7964 €1.226 tbc

1 GBP in USD since 1971

Source: OANDA.COM Historical Currency Converter

For consistency and comparison purposes, coefficient of variation is measured on both the "per pound" ratios, although it is conventional to show the forex rates as dollars per pound and pounds per euro.

National and regional variation

 Ceremonial counties in England by gross value added

A map of the UK divided by the average GDP per capita in 2007 (in euros) showing the distribution of economic activity

The strength of the UK economy varies from country to country and from region to region. Excluding the effects of North Sea Oil and Gas (officially included in the Extra-regio), England has the highest Gross value added (GVA) with Scotland close behind, though Scotland has a higher figure once oil and gas are assigned by country.Scotland had the highest rate of growth over the preceding 12 months, at 4.7%, ahead of even the best performing region of England which was London with growth of 4.1%. GVA per capita figures for 2008 for the four countries of the United Kingdom (excluding oil and gas) are:

Rank Place GVA per capita

in pounds

1 England 21 020

2 Scotland 20 066

3 Northern Ireland 16 188

4 Wales 15 237

Within England, GVA per capita is highest in London. The following table shows the GVA (2008) per capita of the 9 statistical regions of England (NUTS).

Rank Place GVA per capita

in pounds

1 Greater London 34 786

2 South East England 21 688

3 East of England 19 473

4 South West England 18 782

5 East Midlands 18 041

6 North West England 17 555

7 West Midlands 17 463

8 Yorkshire and the Humber, England 17 096

9 North East England 15 887

Two of the richest 10 areas in the European Union are in the United Kingdom. Inner London is number 1 with a GDP per capita of €65 138, and Berkshire, Buckinghamshire and Oxfordshire is number 7 with a GDP per capita of €37 379. Edinburgh is also one of the largest financial centres in Europe.

Government involvement

 United Kingdom budget

Offices of the Defence Equipment and Support in Filton. The site employs over 4,000 people and manages procurement contracts for the British Armed Forces

Government involvement throughout the economy is exercised by the Chancellor of the Exchequer who heads HM Treasury, but the Prime Minister is First Lord of the Treasury; the Chancellor of the Exchequer is the Second Lord of the Treasury. In recent years, the UK economy has been managed in accordance with principles of market liberalisation and low taxation and regulation. Since 1997, the Bank of England's Monetary Policy Committee, headed by the Governor of the Bank of England, has been responsible for setting interest rates at the level necessary to achieve the overall inflation target for the economy that is set by the Chancellor each year. The Scottish Government, subject to the approval of the Scottish Parliament, has the power to vary the basic rate of income tax payable in Scotland by plus or minus 3 pence in the pound, though this power has not yet been exercised.

In the 20 year period from 1986/87 to 2006/07 govenment spending in the UK averaged around 40 per cent of GDP. As a result of the 2007-2010 financial crisis and the late-2000s global recession govenment spending increased to a historically high level of 48 per cent of GDP in 2009-10, partly as a result of the cost of a series of bank bailouts. In July 2007, the UK had government debt at 35.5% of GDP. This figure rose to 56.8% of GDP by July 2009. As of June 2010 there were approximately 6,051,000 public sector employees in the UK (compared to approximately 23,107,000 private sector employees).

Taxation and borrowing

Taxation in the United Kingdom

Taxation in the United Kingdom may involve payments to at least two different levels of government: local government and central government (HM Revenue & Customs). Local government is financed by grants from central government funds, business rates, council tax and increasingly from fees and charges such as those from on-street parking. Central government revenues are mainly income tax, national insurance contributions, value added tax, corporation tax and fuel duty.

These data show the tax burden (personal and corporate) and national debt as a percentage of GDP. Samples are taken at 10 year intervals (snapshots, but the rolling averages are very close).

Year Tax Debt

1975/6 54% 43%

1985/6 44% 43%

1995/6 43% 38%

2005/6* 46% 40%

2009/10 57% 68%

(Source: HM Treasury Public Finances Databank)

Economic indices

The money Gross Domestic Product (GDP) for the United Kingdom, at market prices, in 2009 was £1 396 billion (or $2 003 billion) according to the Office for National Statistics in February 2010.

Nominal GDP 2000 to 2009

Year GDP (billions of GBP) GDP Change

2000 3.9%

2001 2.5%

2002 2.1%

2003 2.8%

2004 3.0%

2005 2.2%

2006 2.9%

2007 2.6%

2008 1 448 0.7%

2009 1 396 -4.9% 

Income distribution

lowest 10%

highest 10% (1999)

2.1%

28.5%

Consumer prices inflation RPI: 3% (2004), CPI: 1.6% (2004)

Labour force composition

services

government

manufacturing/construction

energy

agriculture

(2004)

46%

28%

24%

1%

1%

Industrial growth -0.3% (1999)

Electricity production 368.6 TWh (2007 est.) 

Electricity production composition

fossil fuel

hydro

nuclear

renewables

imports (2004)

74.13%

1.1%

19.26%

3.55%

1.96%

Electricity consumption 345.8 TWh (2007 est.)

Electricity exports 1.272 TWh (2008 est.) 

Electricity imports 12.29 TWh (2008 est.) 

Agriculture products cereals, oilseed, potatoes, vegetables; cattle, sheep, poultry; fish

Exported commodities manufactured goods, fuels, chemicals; food, beverages (notably Scotch whisky), tobacco

Imported commodities manufactured goods, machinery, fuels; foodstuffs

Exports

In 2007 UK exports were valued at £221bn.

Food and drink exports were valued at £9.7bn (2005)

UK total arms exports were valued at £7.1bn (2005)

UK export figures are boosted 10% by high levels of Missing trader fraud according to the Office for National Statistics.

Poverty

 Poverty in the United Kingdom

The United Kingdom is a developed country with social welfare infrastructure, thus discussions surrounding poverty tend to be of relative poverty rather than absolute poverty. According to the OECD, the UK is in the lower half of developed country rankings for poverty rates, doing better than Germany, Italy and the US and less well than France, Austria, Hungary, Slovakia and the Scandinavian countries.

The poverty line in the UK is commonly defined as being 60% of the median household income. In 2007-2008, this was calculated to be £115 per week for single adults with no dependent children; £199 per week for couples with no dependent children; £195 per week for single adults with two dependent children under 14; and £279 per week for couples with two dependent children under 14. In 2007-2008, 13.5 million people, or 22% of the population, lived below this line. This is a higher level of relative poverty than all but four other EU members. In the same year, 4.0 million children, 31% of the total, lived in households below the poverty line, after housing costs were taken into account. This is a decrease of 400,000 children since 1998-1999.

(source:wikipedia)