British economy numbers are impressive by any standards, especially considering the population size and the amount of land available for development. In 2015, it was the 5th largest in the world after the United States, China, Japan, and Germany. But things have not always been this way.
The Post War British Economy
Britain entered World War II with a heavily industrialised economy. This stood it in good stead with arms manufacture. When hostilities were over, the country entered a long period of growth without significant depression. The oil crisis proved a real setback though, from which manufacturing never really recovered.
Higher unemployment and downward wage pressure led to severe labour disputes in the 1979 ‘Winter of Discontent’. The political turmoil that followed necessitated stringent anti-inflation measures. In 1990, the British economy ranking fell to 7th largest, after the United States, Japan, Soviet Union, West Germany, France, and Italy.
The British economy went through ups and downs between 1979 and 1997. The Conservatives under Maggie Thatcher tried to modernise the structure by cutting expenditure and reducing taxes. The pound faced severe downward pressure In 1992 leading to temporary withdrawal from the European Exchange Rate mechanism.
New Labour took over under Tony Blair on the back of the embarrassment, and ruled successfully until the 2008 worldwide recession. Since then, power has been in the hands of the Conservatives and the British economy has slowly begun to recover. The numbers are not always good. Although British growth was the highest in the G-7 of 2014, the UK has one of the least productive workforces in the group, and the highest income inequality in the EU-15.
The British Economy Post Brexit: Quo Vadis
Downsizing the manufacturing sector has left 78% of gross domestic output in the services sector. Much of this, especially the financial services sector involves other countries. Britain is the 6th largest importer globally (53.1% from Europe), and the 9th largest exporter (43% to Europe). Post Brexit, the British economy could be in for a bumpy ride, while it seeks to replace its European interdependence.