1. UK Economy, Business and Finance
13 March 2017 by
Sigrid Brevik Wangsness

2. I. Overview: Developments in the UK Economy 1979-2017
1979: MT took over. Serious economic problems in Britain
Early 1980s: Recession
1987/ 1988: "Economic miracle"?
: Recession (1990: MT resigned)
End of 1992: Signs of improvement

3. Developments in the UK Economy 1979-2017
1993/1994 : Recovery
: Britain’s healthiest eco. in decades (expansion)
: Slowdown, but no recession
: Respectable performance
: Sluggish, but continued growth

4. Developments in the UK Economy 1979-2017
2004: Economic upturn
2005: Setback, but still growth
: Britain’s economy bounced back
Growth in the UK economy had continued for 16 consecutive years, but then....

5. Developments in the UK Economy 1979-2017
2008/2009: Global financial crisis UK economy in recession
: Slow recovery. Huge public debt: “Emergency budget”. Spending cuts/deficit reduction
: “Zigzag” path to recovery
:Growth and relatively healthy recovery. BUT: High household
debt; weak fiscal position; continued austerity measures.

6. And the answer is…
Earlier we asked the question if Thatcherism still has an impact on British society, and the answer is…?

7. II. Major changes in the UK labour market during the 20th and early 21st centuries
Read the text “Changes in the UK Labour Market” on my web page:
The primary sector
The secondary sector
The tertiary sector

8. Major changes in the UK labour market during the 20th and early 21st centuries
1. No longer an empire, but a medium-
sized European power.
2. Employment in the primary and secondary sectors is decreasing: Britain is no longer “the workshop of the world”
3. Employment in the service sector is increasing: In many ways Britain has become “a global service centre”

9. Major changes in the UK labour market during the 20th and early 21st centuries
4. Increase in the import of manufactured goods: Britain’s total imports of manufactured goods actually exceed exports (= a …………..)
5. Lack of investments in traditional British manufacturing
6. The North/South divide

10. Major changes in the UK labour market during the 20th and early 21st centuries
7. Deregulation – “Americanization” - of the labour market
8. Intensification of the work process: rationalization, downsizing
9.The large-scale shift of ownership from
the public to the private sector during
the Thatcher years continued under
the Blair governments

11. Major changes in the UK labour market during the 20th and early 21st centuries
10.Increase in the number of women in
the UK labour market
11.Improved working conditions, workers’ rights and representation, but British unions do not have the same influence on government policies as in the past

12. III. The UK Economy Today
1. Economic Indicators
2. The Sectors of the Economy
3. UK Economic Policy

13. The UK Economy Today 1.Economic Indicators
GDP: 2.0% growth in Q4 2016
Estimate 2016: 2.0%
Inflation: 1.8% (Jan. 2017)
Estimate 2016: 0.7%

14. The UK Economy Today 1.Economic Indicators
Unemployment:4.8% (Nov. 2016)
5.1% a year ago
Current-account balance:
-$138.1bn(Q3 2016, latest 12 mos.)
-$134.2bn a year ago (Q3 2015)

15. The UK Economy Today 2. The Sectors of the Economy
Manufacturing

16. The UK Economy Today 2. The Sectors of the Economy
BBC, 3 March 2017: The UK service sector
UK economy 'loses momentum' as services growth slows.
Growth in the UK's service sector eased to a five-month low in February.
However, it remains above the 50 threshold that separates growth from contraction.

17. The UK Economy Today 3. UK Economic Policy
After the financial crisis, the Conservative government’s medicine: tough spending cuts (and tax increases) = austerity measures - to reduce the huge public debt.
The Office for Budget Responsibility is predicting a sustained recovery from Britain’s most severe recession since WWII.
The UK unemployment rate is lower than in most other European countries.

18. Economic growth in the Euro Zone and the UK

19. The UK Economy Today 3. UK Economic Policy
Britain has one of the most open economies among the big rich countries.
Britain is number one in Europe and three in the world (after the USA and China) as the destination for foreign direct investment, and the second biggest investor overseas.
Britain’s prosperity is to a large extent due to globalisation.

20. IV. Future Prospects for Britain
Philip Hammond, Britain’s Chancellor of the Exchequer (= finance minister = head of the Treasury), presented his first Budget on 8 March 2017.
The budget balance was
-10% of GDP in 2010,
whereas the forecast
for 2016 is -3.7%.
Key points in the Budget. Responses.

21. Future Prospects What will Brexit bring?
Short-term effects after the referendum
The value of the pound
Share prices
Bank of England interest rates
Long-term effects?

22. Future Prospects
Britain has for a long time had a deficit in the current account of the balance of payments.
Will it be able to change this?
UK manufacturers are dependent on larger export markets. Will global free trade help them achieve that?

23. Future Prospects
To remain the most popular location for direct foreign investment in Europe, the UK must keep its competitive advantages of
relatively low taxes and wages
flexible labour markets
competitive product markets
a huge and potent capital market
easy access to bigger markets (the EU? and the USA)
expertise, innovation and research

24. Future Prospects The top sectors for investment in Britain are:
software, IT and internet services, automotive (=car) industry, electronics, telecommunications, finance, management and business, pharmaceuticals and biotechnology, food and drink, engineering, and the creative industries.
Will this continue?

25. V. British Financial Institutions
What is the City (of London)?
Why is it called the “Square Mile”?
What are the main functions of the Bank of England?
How independent
is the central bank
of the government?

26. The City of London
Why have banks generally been unpopular in Britain for a while?
How important is the
London Stock Exchange?
When and what was the
Big Bang? (Which P. M. implemented it?)
How important is the London Foreign Exchange Market?

27. The City of London What is Lloyd’s of London? What does the London
Commodity Exchange do?
What is the Baltic Exchange?
How would you explain the City’s success as a financial centre? Any specific advantages over other financial centres in the world?

28. The City of London
Organisations in the City have been accused of bullying, discrimination and harassment in the workplace. Why do you think such practices may be common in the City?
“Could the UK live
without The City?”