Economic change in the UK

How has the industrial structure of the UK changed?

The UK’s industrial structure (the type of work people do) is always changing. In 1841, at the height of the industrial revolution, there was a substantial change in the UK’s industrial structure, including:

  • jobs in the primary sector (fishing, agriculture and mining) were declining due to the increase in the use of machinery
  • jobs in the manufacturing industry increased as factories were built and urbanisation occurred

During the twentieth century, another significant change in the UK’s employment structure happened, including:

  • a decrease in the number of people working in manufacturing as mechanisation (introduction of robots etc.) replaced jobs along with increased competition from abroad
  • the service sector increased dramatically due to the introduction of public services, the growth of financial services and an increase in leisure time and disposable income
  • since the 1980s, the research and development sector has become increasingly important

You should be aware that industrial structures vary around the country, with some places specialising in different industries.

What impact does globalisation have on the UK economy?

Like all the others around the world, the UK economy has been affected by globalisation. Business, ideas and lifestyles now spread rapidly across the globe due to improvements in travel, the introduction of the internet and the development of trading blocs such as the EU. This has led to more businesses in the UK being owned by companies based in other countries. In the same way, UK companies now own more businesses in other countries. For the UK economy to be prosperous, we need to be part of the global economy.

The main impacts of globalisation in the UK include:

  • Migration – Migrants fill jobs with a shortage of skilled workers in the UK, such as in healthcare and construction.
  • Less manufacturing – Fewer goods are manufactured in the UK because they can be imported more cheaply from countries such as China, where wages are lower.
  • Inequality – The gap between the best-paid and lowest-paid jobs is increasing.
  • Outsourcing – jobs are outsourced to other countries where wages are lower, such as HSBC call centres to India.
  • Economic growth – in most cases, the UK economy increases by 1-2 per cent each year. This is mainly down to trade with other countries, helping the country become wealthier.
  • Foreign investment – foreign companies invest in the UK, bringing new ways of working and technology. This provides jobs and skills development to people living in the UK.
  • Cheaper goods and services – Wages and production have become more competitive, leading to lower-priced products and services.

How have government policies addressed economic change?

The government plays a vital role in shaping the UK’s economy and responding to global trends. There have been three distinct trends in government policy since the Second World War:

  • 1945-79 – state-run industries, such as British Steel Corporation, were set up by the government to support declining heavy industries and protect jobs. However, outdated working practices and machinery lead to factory closures, unemployment and unrest during the 1970s.
  • 1979-2010 – government-run industries were privatised, and many heavy industries closed down, leading to job losses. Private sector and government investment led to the transformation of many former industrial areas, such as London Docklands, into financial centres (such as Canary Warf in London), offices, and retail parks as the service sector began to grow rapidly.
  • 2010 onwards – the government has attempted to rebalance the economy by encouraging investment in high-tech manufacturing, such as aerospace and computer engineering. In addition, significant investment has been made in transport infrastructure, such as London’s Crossrail. HS2 is also being developed to provide high-speed rail links between London and the ‘Northern ‘Powerhouse’. The development of small businesses is also being encouraged through low-cost loans and other financial incentives.
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