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Economy

Great Britain is primarily an industrial and commercial nation. Major industries, such as transportation, communications, steel, petroleum, coal, gas, and electricity, which had been nationalized by Labour governments, were sold to private investors by the Conservative government in the 1980s. The country is a world leader in international trade. In January 1973, Great Britain became a member of the European Community (now called the European Union). The gross domestic product (GDP) in 1993 totaled $941.4 billion. Annual national budget revenues in the early 1990s were estimated at $325.5 billion, and expenditures were $400.9 billion. Britain's unemployment exceeded 10 percent of the workforce in the early 1990s. A primary question facing Great Britain in the mid-1990s is the terms on which it will participate in the on-going financial and economic integration of Europe.

Agriculture

Compared with most other major countries, Great Britain devotes a relatively small portion of its labor force (in the early 1990s about 2 percent of the employed population) to agriculture, forestry, and fishing, and the nation must import more than three-fifths of the food supply for its large population. A great deal of the country's land is not arable due to unproductive soil or inaccessibility, as in parts of the Scottish Highlands. In the early 1990s approximately 27 percent of the total land area of Great Britain was devoted to crops, and about 46 percent to permanent pasture and rough grazing. Agriculture in Great Britain is intensive and highly mechanized. Income from livestock and dairy products is about three times that from crops. Horticultural products are also important, especially in southern England. The most important crops (with approximate annual production in the early 1990s) were wheat (14.1 million metric tons), potatoes (7.8 million), barley (7.4 million), sugar beets (8.5 million), and oats (504,000). A variety of fruits and vegetables is also grown. Livestock in the same period included about 11.8 million cattle, 44 million sheep, 7.6 million pigs, and 136 million poultry.

Forestry and Fishing

Of the approximately 2.2 million hectares (about 5.4 million acres) of woodlands in Great Britain, about 40 percent are in England, 49 percent in Scotland, and 11 percent in Wales. The most common trees are oak, beech, ash, and elm. Pine and birch predominate in Scotland. Production of roundwood totaled about 6.7 million cu m (about 237 million cu ft) in the early 1990s. The Forestry Commission has run a reforestation program since the 1950s, under which approximately 17,800 hectares (about 44,000 acres) were replanted annually in the early 1990s, mostly in Scotland. Private owners, who held more than 60 percent of the total forestlands, were responsible for replanting some 15,500 hectares (about 38,300 acres) of the total. The reforestation of an additional 65,000 hectares (about 160,000 acres) in Northern Ireland was also planned. Despite these recent efforts, however, Great Britain still imports about 90 percent of its timber.

The deep-sea fishing industry has declined since the 1960s, in part because of restrictions legislated by the European Community; it remains most important to the economy of Scotland and is a major source of employment in certain fishing ports. In the early 1990s about 628,400 metric tons of fish were caught annually. Marine fishes harvested include Atlantic mackerel, Atlantic herring, cod, haddock, European plaice (various flatfishes, including flounder), Atlantic salmon, whiting, common cockle, and Norway lobster. The principal freshwater fish caught is rainbow trout. Domestic fish production provides about three-quarters of Great Britain's needs. Notable fishing-product industries are located at Hull, Grimsby, Fleetwood, North Shields, Lowestoft, and Plymouth in England and at Aberdeen and Peterhead in Scotland. The British fishing fleet consists of more than 12,000 vessels, the largest fleet in the European Union (EU).

Manufacturing

By virtue of the Industrial Revolution and the factory system initiated in the final quarter of the 18th century, Great Britain led the nations of the world in amount and value of manufactured products until the industrialization of the United States in the latter part of the 19th century. Principal factors in the industrial prominence of Britain were its early leadership in the wool trade, favorable climate, mineral wealth, development of shipping and naval control of the seas, acquisition of territorial possessions and colonial markets, much greater freedom from political and religious wars and persecutions than existed in continental Europe, and development of improved manufacturing methods and labor-saving machinery.

The great influx of Flemish and Huguenot immigrants during the Protestant Reformation in the 16th and 17th centuries gave great impetus to the original wool industry and introduced new industries such as silk weaving, garment making, and the manufacture of hats, pottery, and cutlery. With the invention of mechanically powered machinery, the textile industry grew rapidly and has remained one of the most important industries of Great Britain. Two inventionssteam-powered mining machinery (1765) by James Watt and railroad locomotives (1815) by George Stephensonwere of major importance in the development of British coal and iron-ore resources and in the expansion of iron and steel manufacturing.

Great Britain has remained one of the most highly industrialized countries of the world. In the early 1990s manufacturing and mining industries employed about 18 percent of the work force and accounted for approximately 24 percent of the GDP. In the same period the approximate yearly production figures were 16.2 million metric tons of crude steel, 1.3 million passenger cars, 172,000 gross registered tons of merchant vessels, 122,200 metric tons of worsted and woolen yarn, and 142 million m (466 million ft) of woven cotton fabrics. Scotland and Northern Ireland were noted for their production of whiskeys and linen, and England had a large brewing industry. In terms of value, the leading branches of the manufacturing sector were food products, transportation equipment, non-electrical machinery, chemical products, and metals and metal products. The leading manufacturing regions were Greater London and the metropolitan counties of Greater Manchester, West Midlands (Birmingham), and Merseyside (Liverpool). Other important industrial centers were Glasgow, the Tees estuary region, southern Wales, and Belfast.

Mining

The strong industrial position long held by Great Britain was based chiefly on the abundant resources of coal and iron ore available for industrial development. These and other mineral resources have been a determinant in the location and development of centers of population and in the country's general prosperity. In the pre-Christian era, Phoenician traders visited what is now England to barter for tin from the mines of Cornwall. British clays were later used for pottery. The coal industry was nationalized (see History, below) on January 1, 1947. Coal production, which had been declining since the 1950s, was given a boost in the 1970s by the increase in the price of petroleum and by the discovery of extensive new reserves. In the early 1980s exploitation was begun of a vast coalfield near Selby, in northern England; this activity helped spur a major increase in national coal output. Petroleum was first discovered under the bed of the North Sea in the 1960s, and production began in 1975. By 1980, 15 fields were producing 1.6 million barrels of high-quality oil a dayvirtually all of Britain's requirementsand oil was becoming an important source of export revenue as well. Production of natural gas from the North Sea fields began in 1967 and has increased steadily; new fields have been located in the Irish Sea and on land in Dorset. Annual production of minerals in the early 1990s included about 84.9 million metric tons of coal, 667 million barrels of crude petroleum, and 53.9 billion cu m (1.9 trillion cu ft) of natural gas. Also important is limestone, with 89.4 million metric tons mined, and iron ore, with 31,000 metric tons extracted annually.

Energy

Annual electrical output in the early 1990s exceeded 317 billion kilowatt-hours, of which about 75 percent was generated in conventional thermal facilities using fossil fuels. Britain was a pioneer in the development of nuclear plants for the production of electricity. The world's first commercial-scale nuclear power station at Calder Hall in Cumberland became functional in 1956. By the early 1990s nuclear power supplied about 16 percent of Great Britain's electricity production.

Currency and Banking

The pound sterling (1), consisting of 100 pence, is the basic unit of currency (0.66 equals U.S.$1; 1996). In 1968 Great Britain took the first step in a three-year conversion of its currency to the decimal system of coinage by introducing the first two new coins, the 5-new-pence piece (equal to 1 old shilling) and the 10-new-pence piece. The conversion was completed in 1971. The pound was permitted to float against the dollar and other world currencies beginning in June 1972.

The Bank of England, chartered in 1694, was nationalized in 1946 and is the bank of issue in England and Wales. Great Britain has 17 major commercial banks with more than 17,000 domestic and overseas branches, most of which are offices of the four leading banks: Lloyds, Barclays, National Westminster, and Midland. Several banks in Scotland and Northern Ireland may issue currencies in limited amounts. Some banking services are provided by the postal system, savings banks, and cooperative and building societies. Many foreign banks maintain offices in London.

Foreign Trade

The prominent position of British commerce in world trade during the 18th and 19th centuries resulted largely from the geographical isolation of the British Isles from the wars and political troubles that afflicted the centers of trade on the European continent. The development of the great trading companies (see East India Company; Hudson's Bay Company), colonial expansion, and naval control of the high seas were corollary factors. Before the 17th century the foreign trade of England was almost completely in the hands of foreigners; wool was the principal export, and manufactured goods were the chief imports. Under the mercantile system (see Mercantilism), which in Great Britain was the prevailing economic theory of the 17th and 18th centuries, the government fostered British foreign trade, the development of shipping, and trading companies. As British overseas possessions increased, the raising of sheep for wool and mutton became a major occupation in the colonies; the practice of exporting wool from England and importing manufactured woolen articles was gradually replaced by the import of wool and the manufacture and export of yarns and fabrics. Cotton textiles, iron and steel, and coal soon became significant British exports.

In the early 1990s Britain remained one of the world's leading trading nations. Its major exports were road vehicles and other transportation equipment, industrial machinery, petroleum and petroleum products, electrical machinery, office machines and data processing equipment, power-generating machinery, organic chemicals, precision instruments, and iron and steel. Leading imports were road vehicles and parts, food products, office machines and data processing equipment, electrical machinery, petroleum and petroleum products, clothing and accessories, industrial machinery, textile yarn and fabrics, paper and paper products, and power-generating equipment. Exports, primarily from France, the United States, Germany, the Netherlands, Italy, and Ireland, were valued at $190.1 billion annually in the early 1990s. In the same period, annual imports, chiefly from Germany, the United States, France, the Netherlands, Japan, and Italy, totaled $221.6 billion. Trade with other Commonwealth members and with the sterling area (a group of countries whose currencies are tied to the British pound sterling) declined after Great Britain joined the European Economic Community (now the European Union) in 1973, and trade with Western Europe has become more important.

Most domestic retail trade is conducted through independently owned shops, although the number of department, chain, and cooperative stores and supermarkets is increasing. More than half of all wholesale trade is carried out in London.

Tourism

Tourism is an essential source of overseas income. In the early 1990s some 19.3 million visitors toured Great Britain annually, spending about $13.7 billion. Under the Development of Tourism Act of 1969, a government organization, the British Tourist Authority, has been set up to attract visitors and improve tourist accommodations and travel conditions.

Transportation

The irregular coastline of the British Isles, with its numerous indentations and bays and navigable streams, the improvement of the country's harbors, and the provision of dock facilities have all helped Britain grow into a maritime power. The Navigation Laws of the 17th century were instituted to give English vessels maximum advantage in the carrying of English products, and naval victories over Spain and France, chief rivals of Britain in world trade, gave the nation control of the seas and preeminence in world merchant shipping. This leadership lasted until World War II (1939-1945), when the destruction of British shipping by enemy action and the increased production capacity of U.S. shipyards enabled the American merchant marine to overtake and surpass the British merchant fleet. In 1993 the British registry listed about 8.8 million gross tons of commercial shipping, a 38 percent decline since 1985. Most British ports rely on intercoastal trade. The majority of the international ports have been nationalized. Among the country's leading seaports are the extensive Port of London, Liverpool, Manchester (an inland seaport), Grimsby, Southampton, Milford Haven (a petroleum port), and Glasgow. Other major ports include the Tees River ports and Felixstowe.

In the 15th century the English government began improving natural waterways and constructing canals. By the early 1990s Great Britain had about 5600 km (about 3500 mi) of canals and navigable rivers. The most important canal is the Manchester Ship Canal. Railroads began to supplant canals in the 19th century, and the first important railroad line in the world was opened between Liverpool and Manchester in 1830. After almost a century of development and expansion the railroads of Great Britain were divided, in 1921, into four major systems: the London, Midland, and Scottish Railway; the London and North-Eastern Railway; the Great Western Railway; and the Southern Railway. In 1948 the four lines, together with their associated railroad and steamship lines, docks, hotels, and canals, were nationalized, or put under government operation. In 1994 the British government began transferring the railroads back to private ownership, a process called privatization. In early 1996 three private companies took over selected British Rail routes. Another four companies were formed in April 1996, and the government plans to have privatized 95 percent of British Rail by May 1997. In the early 1990s the British railroads operated about 16,914 km (about 10,510 mi) of track, including about 394 km (about 245 mi) of the London subway system.

In the late 19th century work was begun on a tunnel beneath the English Channel. The project was later abandoned, and then revived in 1957. Work began again but was halted in 1973 by Great Britain due to the immense cost of the project. In 1987, however, work again began and the English Channel Tunnel, owned by both Great Britain and France, was completed in 1993. It is 52 km (32.2 mi) long and runs between Folkestone, England, and Calais, France. The tunnel, which cost more than $15 billion, runs 130 m (426.5 ft) below sea level, and is composed of three parallel tunnels, one for freight exclusively and two for the transportation of passengers, cars, and freight. Freight trains can travel through the tunnel at speeds of up to 300 km/h (186 mph), resulting in a crossing time of about 90 minutes. On May 6, 1994, Queen Elizabeth of Great Britain and President Franois Mitterrand of France rode through the tunnel as part of its inaugural ceremonies.

British Airways was formed in 1972 by combining the two state-run airlines, British Overseas Airways Company and British European Airways. Privatized in 1987, British Airways operates one of the largest route networks in the world, traveling to some 170 destinations in 77 countries. In 1976, together with Air France, British Airways inaugurated the world's first supersonic passenger service, using Concorde aircraft. Besides the national airline, Great Britain has numerous independent operators. Major airports include London's Heathrow, Gatwick, and Stansted, as well as Luton, Manchester, and Glasgow. In 1970 Great Britain joined Airbus Industrie, a European aircraft manufacturing consortium, as an associate partner. Airbus manufactures medium and large widebody passenger jets with parts from each member of the consortium. In 1979 Great Britain became a full member, joining France, Germany, and Spain; Belgium and the Netherlands are associate members.

The road system of Great Britain in the early 1990s consisted of about 362,982 km (about 225,557 mi) of public routes. Some 20.1 million passenger cars were registered in Great Britain. Automobile travel has become increasingly important in recent decades; about 90 percent of all passenger travel in Great Britain is by road.

Communications

The Post Office, founded in 1635, maintains about 20,000 branch offices throughout Great Britain and administers a postal savings system. The postal system was revised and penny postage established in the 1830s. In 1969 the post office was reorganized as a public corporation. A parcel post system has largely supplanted privately run express companies in the carrying of light parcels.

In 1870 the government acquired the British telegraph systems, and in 1892 it began buying the private telephone companies. Telecommunications are administered by British Telecom (known as BT since 1991), founded as a state corporation but privatized in the 1980s. Some 26.3 million telephone lines were in use in the early 1990s, giving Britain one of the world's largest telecommunications systems.

The British Broadcasting Corporation (BBC) and the Independent Broadcasting Authority (IBA), both public bodies, are licensed to provide television and radio broadcasting services. Founded in 1922 and working under a royal charter, in the early 1990s the BBC operated 2 television channels as well as 5 national networks and 33 local radio stations. It is financed mainly through the sale of annual licenses for television receivers. The BBC also provides foreign radio broadcasts in many languages. The IBA, which oversees the operation of independent television and radio, was created by Parliament in 1954 (until 1972 it was known as the Independent Television Authority). In the early 1990s, independent television was provided on a regional basis by 16 commercial program companies; satellite broadcasting services have also been introduced. Four television channels are currently broadcast and a fifth is planned. Local radio stations are run by some 90 commercial firms, centered mostly in the larger cities. Commercial advertising on both independent radio and television pays for the services. There are no commericals on BBC radio or television broadcasts. In the early 1990s an estimated 65.8 million radios and 25 million television sets were in use.

Some 101 daily newspapers and more than 2000 weekly newspapers are published in Great Britain. Fourteen London newspapers circulate nationwide, and five of them have daily circulations of more than 1 million. Among the most respected British daily newspapers are the Times, the Guardian, the Daily Telegraph, and the Financial Times, all published in London. Noted weeklies include New Scientist, New Statesman and Society, the Spectator, and the Times Literary Supplement. Great Britain also has many well-known book publishers. Tabloid newspapers, characterized by sensationalized stories and large quantities of photographs and graphics, are both popular and influential in Great Britain.

Labor

The total British labor force in the early 1990s numbered about 28 million, of whom about 7.6 million were members of 68 unions affiliated with the Trades Union Congress. Collective bargaining is generally conducted on a national and industrywide basis. The standard workweek ranges between 35 and 40 hours, varying with each industry. In the postwar era, succeeding governments sought to implement a policy of full employment, and unemployment generally averaged between 1 percent and 2 percent of the total workforce. In the mid-1960s, however, Great Britain was forced to abandon this policy to a degree because of a persistent payments deficit and inflationary pressures.