Sectors of Economy

Britain’s land surface is minimal compared to many other nations, but British agriculture is very intensive, highly productive and mechanized. During the 20^th century output rose steadily, although the increase slowed towards the end of the century, and agricultural labour became more productive. The improvement was due to innovations in farm machinery, biological engineering of seeds and plants, and the increased use of fertilizers. Compared to other nations in the EU, Britain’s agricultural sector is much smaller in terms of employment and contribution to the GDP. In 2008 agriculture employed approximately 1.4% of the workforce and contributed 0.9% to the total GDP.

Many of Britain’s full-time farms are devoted to livestock farming – raising cattle for dairy products or beef, or raising sheep for wool and meat.

Most crop farming in Britain takes place in eastern and south central England and in eastern Scotland. The leading crops are wheat, sugar beets, potatoes, barley, and rapeseed. As concern has grown about the use of fertilizers, pesticides, and biologically engineered seeds and their effect on the environment, some farmers have turned to organic farming, with support from the government.

The UK retains a significant, although vastly reduced, fishing industry. Fish and fish products are both imported into and exported from Britain. Kingston upon Hull, Grimsby, Fleetwood, Great Yarmouth, Peterhead, Fraserburgh, and Lowestoft are among the coastal towns that have fishing industries.

Forestry: Britain was once covered with thick forests, but over the centuries the expanding human population steadily deforested nearly the entire country, felling trees for fuel and building materials. Most of the forested area consists of commercially planted, fast-growing coniferous trees in Wales and north-eastern Scotland. Britain has made efforts to increase the managed forest areas. Imports of wood and wood products are substantial because Britain produces only a small proportion of the wood it needs.

Mining: Raw materials for construction form the bulk of mineral production, including limestone, dolomite, sand, gravel, sandstone, common clay, and shale. The UK has large coal, natural gas, and oil resources, but its oil and natural gas reserves are declining and the UK became a net importer of energy in 2005. Energy industries contribute about 4% to GDP.

The history of manufacturing in Britain is unique because of Britain’s role as the birthplace of the Industrial Revolution. During the Industrial Revolution new methods of manufacturing products were developed. Instead of being made by hand, many products were made by machine. Production moved from small craft shops to factories, and population shifted to urban areas where these factories were located. Cotton textile factories using newly developed steam-powered machines produced more goods at a lower cost per item. Textiles, shipbuilding, iron, and steel emerged as important industries, and coal remained the most important industrial fuel.

The structure of British industry changed substantially in the last half of the 20^th century. Coal mining and cotton textile industries declined sharply. As coal production declined, oil production replaced it as a major industry. Motor vehicle production became a significant part of the industrial base but was subject to severe foreign competition. As incomes increased, consumer demand rose for durable goods such as cars and kitchen appliances.

British industrial production also expanded into communications equipment, including fibre optics, computers, computer-controlled machine tools, and robots. Growing industries in recent decades include paper products and publishing; chemicals, such as pharmaceuticals; rubber and plastics; electronic and optical equipment.

The UK electronics manufacturing industry, despite experiencing a decline in output since the peak of the global information and communication technologies boom in 2000, remained the fifth largest in the world, accounting for 7% of manufacturing GVA in 2006, and 6% of manufacturing employment.

Similarly, the UK’s automotive industry sector continued to employ around 180,000 people and accounted for 6% of manufacturing GVA in 2006. Within the UK, more than 40 companies manufacture vehicles, ranging from volume car and van makers, to specialist niche producers manufacturing high value and luxury vehicles. While overall employment in the UK automotive industry has fallen in recent years, in line with many OECD economies, there are many positive stories regarding the UK auto sector’s response to globalisation. Ford now sources 25% of its global engine requirement from the UK. Nissan Sunderland’s plant has become Europe’s most productive car plant.

In the year of 2008 the industry generated 22.8% of the total GDP. As the global economic crisis takes hold, hardly any other country has seen its fortunes wane as brutally as the United Kingdom. The levels of output, new orders and employment in the manufacturing sector recorded unprecedented declines in 2008.

Service sector includes finance, retailing, wholesaling, tourism, business services, transport, insurance, investment, advertising, public relations, market research, education, administration, government and professional services.

Services account for three quarters of the UK economy and the sector is facing a very tough 2009 due to the ongoing financial crisis, housing market slump, and the fall in consumer spending. All components of the sector decreased in the three months to January 2009, of which business services and finance showed the most significant decrease. As a result service sector companies are cutting jobs.

Finance, insurance and real property has always been the most important service industry in Britain. Banking and financial services have played an important part in London’s economy, and levels of specialization and expertise have been high. London has the largest concentration of international banks in the world and is the world’s leading centre for currency trading. Leeds, Manchester, Cardiff, Liverpool, Edinburgh, and Glasgow have developed as financial centres in recent decades. London is also the world’s leading centre for insurance and handles 20% of the world’s insurance business.

Britain remained one of the world’s leading trading nations in the 21^st century. It generally ran a large trade deficit, with imports exceeding exports. Visible exports, or trade in merchandise, account for about half of Britain’s overall trade. Trade in services – including sea transport, civil aviation, travel, government services, investment income, transfers, and financial services – accounts for the other half. For many years tourism has been a major element in the UK economy and the most important invisible source of foreign exchange earnings.

Much of Britain’s trade is with the European Union, especially Germany, France, and the Netherlands. The United States is another major trading partner.

Britain’s major exports are manufactured goods, fuels, chemicals, food, beverages, tobacco. The main country’s imports are manufactured goods, machinery, fuels, and foodstuffs.