The Economy In Britain Essay Research Paper

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The Economy In Britain Essay, Research Paper V THE ECONOMY A Overview In the 19th century, Britain had the world s leading economy: Its overseas trade thrived, its standard of living rose steadily, and its citizens pioneered industrial innovations. With the growth of the economies of other nations in the 20th century, the British economy remained relatively strong. It has continued to grow, and Britain remains a major producer of industrial goods and provider of services, as well as a center of world trade and finance. In the 20th century, Britons saw their per capita disposable income triple, an accomplishment all the more remarkable considering Britain s size and limited natural resources. The skills and ingenuity of Britain s highly trained workers, managers, and

entrepreneurs have enabled the British economy to function well and provide for its large population. Although Britain s economy was strong in the 20th century, it faced a number of persistent problems. The balance of trade was one. Britain has had to import more than a tenth of its food and much of its raw materials, as well as many manufactured goods, and it has to export sufficient products and services to balance the cost of its imports. Another problem has been industrial inefficiency, which was particularly evident in older industries such as coal mining, shipbuilding, and textiles, which produced more products than they could sell. Some industries that had been nationalized (taken over by the state) after 1945, such as British Oil Corporation, British Airways, and British

Telecommunications, were unprofitable and operated at a considerable cost to taxpayers. In addition, trade unions sometimes required companies to hire more workers than were needed, and time was lost due to strikes as workers pressed for higher wages. These trade union problems increased the cost of goods, which helped cause inflation. Inflation occurs when the demand for products is higher than the supply, which leads to an increase in the value and price of products. At the same time, unemployment remained high 11 percent of the workforce in the early 1980s and efforts to lower it were not successful. These problems were particularly evident during the 1970s, when high oil prices triggered a worldwide recession. Since the mid-1970s, Britain has benefited from a worldwide

economic upswing as well as internal improvements. The government has taken a number of steps to encourage economic growth. It curtailed the power of unions and sold some nationalized industries, including British Airways and British Telecommunications, to private companies (called privatization). The government sought to encourage business and private investment by lowering taxes and easing restrictions, such as deregulating the stock exchange and lifting restrictions on certain business agreements. Simultaneously, it sought to curb its spending and services. Newer, more profitable high-tech industries absorbed more workers and managers, while many older, less-efficient firms folded. Britain s economy received a boost with the discovery and exploitation of abundant oil reserves

in the North Sea. Because of this oil, Britain no longer depends on imports of foreign petroleum products and also profits from exports of petroleum products. In 1997 Britain s economy grew at a rate of 2.5 percent, one of the highest rates among members of the European Union. B The Government’s Role in the Economy Like many modern developed countries, the United Kingdom has a mixed economy. This means that some sectors of the economy are operated by the government and some are operated by private businesses. Since World War II (1939-1945), Britain has worked to balance the mix of private and public enterprises in order to maximize the country s economy and ensure the economic well-being of its citizens. Historically, Britain s Conservative Party has sought a stronger private