United Kingdom

H

Manufacturing

The history of manufacturing in Britain is unique because of Britain’s role as the birthplace of the Industrial Revolution. During the Middle Ages the production of woolen textiles was a key industry in Britain. In the 16th and 17th centuries, new industries developed. These included silk weaving, garment making, and the manufacturing of hats, pottery, and cutlery. All of these operations were generally conducted in small craft shops and were labor-intensive.

In the 18th century a number of changes in British society prepared the way for the Industrial Revolution. Colonial and commercial expansion created markets in North America, Africa, and parts of Asia. Coal and iron mining developed as Britain’s dwindling forests created the need for another energy source, and new smelting techniques made iron implements cheaper to produce. An agricultural revolution in the 18th century introduced new crops and crop rotation techniques, better breeding methods, and mechanical devices for cultivation. This coincided with a rapid increase in population, in part due to better hygiene and diets, providing both consumers and workers for the new manufacturing operations.

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 Industrial Revolution dramatically raised the overall standard of living.

The structure of British industry changed substantially in the last half of the 20th century. The 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 fiber 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; and electronic and optical equipment.

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Scotland is also a major producer of computers. The so-called Silicon Glen between Glasgow and Edinburgh employs thousands of people in the electronics industry and is the site of many overseas computer firms. Scotland and Northern Ireland are still noted for their production of whiskey and textiles, especially linen from Northern Ireland and tweed from Scotland.

Britain remains an important manufacturing country, although it imports large quantities of manufactured goods from overseas, particularly vehicles and electronic equipment. The automobile manufacturing industry had declined during the 20th century until Japanese manufacturers opened plants in Britain in the 1990s. About 12 percent of the workforce was engaged in manufacturing in the early 2000s, and manufacturing accounted for about 16 percent of the gross domestic product (GDP).

I

The Service Sector

One sign of a highly developed nation is a large and sophisticated service sector. When a nation’s economy matures, its service sector grows rapidly while its manufacturing sector stabilizes or diminishes. This was the case with Britain. In the early 2000s Britain’s service sector accounted for nearly three-fourths of the GDP and employed almost fourth-fifths of the workforce. The service industries include finance, retailing, wholesaling, tourism, business services, transport, insurance, investment, advertising, public relations, market research, education, administration, and government and professional services.

Britain developed sophisticated banking, financial, insurance, and shipping operations as early as the 17th century to support its expanding international ocean trade. Lloyd’s of London, an early insurance house, began when a number of people willing to underwrite, or insure, the success of voyages gathered regularly at Lloyd’s Coffee House in London to share shipping news. Lloyd’s now insures approximately half of the world’s shipping and cargoes as well as much of the aircraft industry.

Banking and financial services have always played an important part in London’s economy, and levels of specialization and expertise have been high. This has attracted ever-larger amounts of business from an increasingly global economy. Today, London has the largest concentration of international banks in the world and is the world’s leading center for currency trading. Leeds, Manchester, Cardiff, Liverpool, Edinburgh, and Glasgow have developed as financial centers in recent decades. London is also the world’s leading center for insurance and handles 20 percent of the world’s insurance business. The financial services sector expanded especially rapidly after the deregulation of the stock exchange in 1986. By the early 2000s financial and other business services, including real estate, accounted for more than one-quarter of Britain’s GDP and employed nearly one-fifth of the workforce.

Several significant developments in the service sector took place toward the end of the 20th century. Telecommunications became a dynamic growth industry, and independent retailing declined sharply.

The leisure industry grew dynamically, commanding an increasing proportion of consumer spending. Organizations catering to international conferences and exhibitions also have been a growth area. These organizations have been particularly successful because Britain is one of the world’s top locations for business meetings and trade shows.

Tourism has become an increasingly important economic sector in Britain, employing at least 7 percent of the workforce. Britain is one of the world’s top tourist destinations, annually attracting about 25 million overseas visitors in the early 2000s—more than a 50 percent increase over the early 1980s. Under the Development of Tourism Act of 1969, a government organization, the British Tourist Authority, was set up to attract overseas visitors and to improve tourist accommodation and travel conditions.

J

Energy

Britain has more energy resources than any other country in the European Union, chiefly in the form of oil and natural gas. Other energy sources include coal and nuclear power. Scotland has some hydroelectric power stations. Alternative energy sources, notably wind farms, are being developed in various parts of Britain.

J

1

Oil and Natural Gas

Oil was discovered in the North Sea in 1969. By the 1980s it was adding significantly to the British economy as oil exports increased during a period of high oil prices. British taxpayers also benefited from the taxes and royalties paid by the oil and gas companies, which are licensed by the crown to search for and produce oil and gas. However, oil production peaked during the 1990s and has since declined.

Gas has been used since the 19th century in London and other places, but it was manufactured from coal. Since the 1960s, when offshore gas fields were discovered, natural gas has been used. In the early 2000s natural gas accounted for more than two-fifths of the fuel consumption in Britain.

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2

Coal

Coal was Britain’s traditional source of energy for about 300 years. It was the main source of fuel during the Industrial Revolution, when it was mined, used, and exported in large quantities. Peak production occurred in 1913, when more than 300 million tons were mined. Coal has become far less important to the British economy. In the past 20 years cutbacks in coal production have been severe, particularly since the end of a bitter miners’ strike in 1984. Production in 2003 was 28 million tons. Coal supplies an ever-smaller proportion of Britain’s total energy needs.