Economy of United Kingdom

          Empire that “does not let the sun go down” is the term used for some overseas empires in history, especially England. It deserves this term, which expresses power due to its profound effects on all areas such as economic, political, and science in world history. When it is evaluated economically, the first thing to be said is the industrial revolution and the colonial concept. Because Britain is the first country to realize the industrial revolution in Europe. The industry started in England in the second half of the 18th century with the operation of rich coal deposits. The British, who needed raw materials after the Industrial Revolution, searched for raw materials in all over the world, and filled the vacant place where Spaniards are kicked out. Britain’s major source of income has been trade since ancient times. Therefore, since the raw materials from colonies and backward countries were processed and sold to these countries, the economic wealth of Britain had reached great dimensions. After the colonies gained their independence, that situation began to change strongly, and world wars too frayed out Britain. Thereby, the British Empire dispersed. Although a large trade fleet of multinational British companies (such as British Petroleum, Imperial Chemical Ins. And Shell) supports the trade balance in favor of the country, the country’s economy of the country is sometimes depressed, which causes social problems. Consequently, England is gradually losing its former economic power. In this article’s the first part, the economic situation of England will be evaluated in terms of geography, political and administrative structure, population and labor force, natural resources. The second part, economic indicators and consuming areas, while the third or last part will include England’s general foreign trade, and trade between Britain and Turkey. 

          The British Isles, located in the northwest of Continental Europe, have a surface area of 244,100 km2. The largest of these islands is Great Britain, and the second largest is the island, located in the west of the island of Great Britain, on which Northern Ireland and the Republic of Ireland are located. 130,400 square kilometers of the UK’s 244,100 square kilometers, belong to England, while Scotland covers 78,800, Wales 20,800 and Northern Ireland 14,100 square kilometers. Approximately 71% of the land of the country, whose capital is London, consists of land and meadows suitable for cultivation, 10% consists of forest areas and 19% consists of cities. Considering the political and administrative structure of the United Kingdom, the UK, which consists of England, Wales, Scotland and Northern Ireland, is a country governed by Constitutional Monarchy and Parliamentary Democracy. Also, there is no single constitutional text arranged under the name of the constitution. Head of the state is Queen Elizabeth II. On 24 July 2019, Boris Johnson became The Prime Minister, instead of Theresa May. The British Parliament consists of the House of Commons and the House of Lords. The parliament has a total of 645 members. With the referendum held in the country in June 2016, the decision to exit the European Union (Brexit) was taken. The country’s exit from the 47-year EU membership took place on January 31, 2020. An 11-month transition period is expected to extend until December 2020. During the transition period, The EU and the UK will negotiate a new agreement that will shape their future economic and political relations. According to the UK Official Statistical Institution, the population growth rate in 2018 is 0.6%. Approximately 84.3% of the population is England (56 million), 4.7% is Wales (3.14 million), 8.2% is Scotland (5.44 million), 2.8% is Northern Ireland (1.9 million). Due to low birth rates and increasing life expectancy, the population of the country has been getting older day by day. The number of the population over 65 is growing faster than the other part of the population. The UK is the country with the most energy resources in the EU with its rich oil, natural gas and coal resources. However, production has declined steadily since the 1990s and it is unable to meet local demand. Rising global energy prices are a risk to the economy, as the country is increasingly dependent on imports. The country, which was self-sufficient in terms of energy during the 1980s, has become a net energy importer today. Other mineral resources of the country are extremely limited. Although it does not seem possible for renewable energy sources to meet the increasing energy demand, its usage rate is gradually increasing. Especially wind energy capacity has increased rapidly. England ranks first in terms of world coastal wind power capacity. 

         The currency of the UK is sterling and with its $ 2.8 trillion GDP, Britain is the second largest in the EU, after Germany, and the fifth largest economy in the world. National income per capita is $ 46,114. In 2018, 80% of GDP was the service sector, 14% was the industrial sector, 6% was the construction sector, and less than 1% was the agricultural sector. The share of the financial sector in the service sector is 40%, the share of public administration and the government is 28%, and the share of hotel and restaurant services is 17%. The remaining 15% consists of transportation, storage and communication services. Economic growth has taken its basis in recent years from employment growth, flexible consumer demand, financial supports and increases in exports. The increasing tension in world trade since mid-2018, the decrease in growth in Europe and developing markets and the more volatile markets caused a contraction in the foreign markets of the country. The persistence of uncertainty regarding Brexit also contributed to the economic slowdown. Brexit also led to the withdrawal of new domestic investments. Large investment plans are expected to remain suspended until clarifying how future trade agreements with the EU will become clear. Given the country’s low investment rates and poor productivity performance over the past 10 years, this is not a positive sign in terms of the country’s medium-term growth potential and living standards. The financial deficit, which reached its highest level in 2009, gradually declined and reached a consistent level. The public debt stock to GDP ratio is high. Household debt stock is also high. Household saving has been at low levels from past to present. The pound lost value after the Brexit referendum. The volume of the current account deficit has also been large despite the recent decline. The main reason for this is the large foreign trade deficit. Despite all this, the UK will continue to offer market opportunities that a rich and developed country offers. The country’s $ 2.8 trillion GDP and over $ 40,000 per capita national income means an important market size. In the country, where household consumption is 1.9 trillion dollars as of 2019, household consumption per person is $ 27,940. Despite the uncertainties caused by the Brexit process, the UK economy, a large, rich, flexible and consumption-oriented economy, will continue to provide opportunities for both global and domestic investors. The aging population profile of the country creates demand in the fields of healthcare and recreation and leisure. However, the per capita health expenditure is slightly below the European average due to the higher income inequality in the country compared to other European countries. This population profile shows clearly the main consumption areas of England. 

          Having the fifth largest economy in the world and the second largest economy in the EU, England ranks high in the world trade in goods and services. According to Trademap data, the country ranks 5th in world imports and 10th in world exports in 2018. Except for some exceptional cases, such as the great increase in the export revenues of oil prices, which increased between 1980 and 1982, England’s commodity trade has a constantly deficit. The country is still a net importer in products such as food, petroleum and petroleum products, motor vehicles, non-petroleum raw materials, clothing, shoes, electric machines, non-electric machines, furniture and lighting products, and motor vehicles. On the other hand, the UK is a net exporter country in pharmaceutical products, optics and medical devices, chemicals, beverages, especially whiskeys, aviation and spacecraft parts, iron-steel, copper, raw leather and technical textile sectors. When considering relationships between Turkey and United Kingdom, Britain is a very important trading partner of our country. Turkey has a surplus in foreign trade with Britain and it is one of the developed countries that exports is constantly increasing. Automotive main and subsidiary industries, knitted garments and accessories, electrical machinery and devices, non-electric machinery and devices, jewelery, non-knitted garments and accessories, iron and steel, plastic and plastic articles, paper and cardboard, edible fruits, nuts are the main product groups that are important in exporting to UK. Non-electric machinery and devices, gold, iron and steel, automotive main and supplier industry, medicines, electrical machinery and devices, plastic and plastic goods, organic chemicals, optical devices, medical instruments are important product groups in importing from UK. 2005-2018 period, according to Central Bank data, to Turkey by British firms, the amount of direct foreign investment was 10 billion US dollars. The amount of investments made by British companies in 2018 is 409 million USD. British capital in Turkey, has been turning to infrastructure, energy, food and tourism sectors. Important firms that invest in Turkey, include Vodafone, HSBC, Tesco (withdrew from the market), and Marks & Spencer. 

          As a result, although the UK economy has problems like every country, it is still among the strongest economies, even if it does not maintain its economic strength that belongs to the colonial times. From a geographical perspective, it can be said that UK will invest more in renewable energy in the upcoming period. The liberal environment of England still gives great confidence to the investor. If the population continue tends to aging, and if there is no rapid transition to technologic autonomous period, it will be a big problem for the British economy as a labor shortage. In addition, a population with an aging trend will increase the need for health systems and increase investments in this area. Although the process of the exit from the EU creates uncertainty, the UK still has a strong consumption potential for Turkish investors. Turkey will continue to protect trade surplus with UK as it should be and will increase in the future. Making free trade agreements with countries like the UK and US, will create major economic benefits for Turkey. Turkey with the agreement, will carry a strong economic potential as an indispensable partner for these countries. 

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