British Economy a House of Cards!

[Wetcoast40]

On Thursday, the Labour Government of Britain presented its latest budget and since it is an election year (May?), loaded it up with goodies; or so they would have us believe.
I have been fortunate enough to visit Britain several times in the last few years. I have friends and relatives who live there and I enjoy the opportunity to visit the history of my ancestors.
However, I am at a loss to know how the economy sustains itself. As those who travel there know, what we purchase in Canada for a dollar costs a pound in Britain. Housing, food, travel, fuel, entertainment; all are on a par with our part of the world except that their pound purchases what our dollar does here.
Their economy is based on.....what? Tourism? North Sea Oil? Exports of British Brandy? As far as I can tell, their chief employer is themselves. Their civil service outnumbers even our bloated bunch (per capita).
Does anyone out there have a clue what makes this marvelous island nation tick? :?

 

[Jay]

SHEEP?

 

[Reverend Blair]

RE: British Economy a Hou

Mick Jagger paying Maggie Thatcher's Bastard Son for sexual favours?

 

[EagleSmack]

lol

 

[Hard-Luck Henry]

Briefly; Highly intensive/efficient agriculture, which provides 60% of nation's food needs, whilst utilising 1% of it's labour.
Large pharmaceuticals industry.
Service industries - banking, insurance, retail etc.
Own coal/oil/gas reserves, making the UK a net exporter of these products. Energy intensive industries also receive major tax rebates.
Britain is a very corporation-friendly place.
New Labour gov't. has continued the previous gov'ts. policy of deregulation (amongst other pro-corporate policies), making the UK attractive to foreign investors, if not to it's workforce.
British corporations are also the most acquisitive in Europe. Small business has been virtually wiped out; consolidation is widespread, meaning less competition and higher prices. Mergers worth hundreds of billions take place every year. Britain is gradually becoming part of a transatlantic single market, controlled and run by corporate chief executives.
But it's not all good; it rains a lot, andthe trains are always late.

And it's "Sir Mick" to you, Rev.

 

[Jay]

Henry ruined all the fun....

 

[Reverend Blair]

RE: British Economy a Hou

I've always been more partial to Keef...er...Keith, Henry. Have a look at the Nick Nolte thread and substitute names for details. ;-)

 

[mrmom2]

they survive on taxing there old rock stars

 

[Hard-Luck Henry]

Re: RE: British Economy a House of Cards!

they survive on taxing there old rock stars

Nah, man; All the old rock stars, like the film stars, are tax exiles. They all live in L.A. for 9 months, to avoid paying the higher rate. That's why they're so f*cking wrinkly - too much sun, not enough rain. (hey; idea: when the North Sea oil reserves run dry, we'll be able to burn the Stones - they're fossils, too :wink: )

(btw, I once met Ronnie Wood (very, very briefly, it need to be said), but that's another story).

 

[Reverend Blair]

They all live in L.A. for 9 months, to avoid paying the higher rate.

I thought the Rolling Stones used Bahamas as their tax haven. Keef has a house (yeah, gazillionaires have "houses :wink: ) in Conneticut or something though...I heard somebody on TV complaining about the things in his hair once.

 

[Hard-Luck Henry]

Well spotted Rev. 8) I'm sure you gathered I was using L.A. as a generic term for "foreign places wot stars and that live in, like". :wink: I'd have thought the things in his Keef's hair would be nobody's business but his own. Connecticut life, I suppose.

 

[Blackleaf]

The UK is the world's second-largest producer of aircraft and aircraft parts.

It is the world's 2nd-largest services exporter.

It has the world's 5th largest film industry.

It is Europe's most productive car manufacturer.

It's economy is the 4th largest in the world, and will soon overtake Germany.

 

[Blackleaf]

Also, the UK is the ONLY EU country that trades MORE with countries OUTSIDE of Europe than within Europe. The Continental countries are notoriously inward-looking and tend to just trade amongst themselves.

 

[Blackleaf]

The UK also has a VAST financial services industry, probably the largest int he world. The City of London is the centre of the world's financial industry.

 

[Blackleaf]

Aerospace & Airports
The UK aerospace sector is the SECOND LARGEST in the world. Comprising a small number of world-class systems integrators, major first tier suppliers and a large pool of lower tier suppliers, many are world leaders in both manufacturing and research into new technologies.

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Biotechnology
The UK will always remain at the forefront of medicine and of the biotechnology and pharmaceutical industries. Indeed UK investment in healthcare research and development reached an estimated £3.5 billion in 2003.

The UK's biotechnology sector is the LARGEST IN EUROPE, with around 480 companies employing over 26,000 specialists. UK biotech companies have produced over 40 marketed biotechnology drugs and have over 20 more in Phase III trials.

The UK pharmaceutical industry, largely based in the South East, North West and North East of England, is the world's third largest exporter of medicines. Research-driven, it is one of the UK's most dynamic industries, of key importance to the economy. Over 300 pharmaceutical companies operate in the UK spending more than $3.2 billion on research and development every year.

Most of the world's major pharmaceutical companies have a presence in the UK including Pfizer, Johnson & Johnson, Aventis, Novartis, Roche, Bayer and Merck. Many of the world's top biotech companies also have a presence in the UK including Amgen, Serono, Chiron, Genzyme and Biogen IDEC.

The Pharmaceutical Industry Competitiveness Task Force (PICTF) was established in April 2000 to facilitate a structured, action oriented platform for effective dialogue between Industry and Government. The final report was published in March 2001.

The Bioscience Innovation and Growth Team (BIGT) published the 'Bioscience 2015' report, containing recommendations for increasing the competitiveness of UK bioscience, in November 2003.


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Chemicals
CHEMICALS INDUSTRY
Overview
The chemical industry is an international industry which mainly processes raw materials and manufactures and supplies intermediates to other manufacturing industries.

Products of the chemical industry form the basis for every manufacturing activity vital to transport, healthcare, food and drink, construction, textiles, IT and all sectors of the economy.

Chemical sectors range across bulk petrochemicals, inorganics, man-made fibres, coatings and inks, dyes, pharmaceutical active ingredients and speciality intermediates, adhesives, detergents, cosmetics, and downstream plastic and rubber processing. Household names such as Lycra, Kevlar, Perspex, Teflon, Dulux paints, Imperial Leather and Persil are all examples of products of the chemical industry.

UK Market
The chemical industry is the UK’s largest manufacturing sector, accounting for 11% of the value added by the whole of the UK manufacturing industry (Department of Trade and Industry [DTI], 2003).

The chemical industry in the UK is the sixth largest in the world after the US, Japan, Germany, France and Italy. It employs 181,000 people in 3,200 companies in chemicals (excluding pharmaceuticals). The industry accounts for 1.3% of gross domestic product (GDP). Chemicals (excluding pharmaceuticals) have a solid trade surplus of US$3.8 billion (DTI, 2003).

The UK chemical industry is highly innovative and technologically advanced, with significant expenditure on research and development. It manufactures a diverse range of materials and products, some materials being used as ingredients for chemical products such as pharmaceuticals, paints and personal hygiene goods, which are purchased directly by the consumer. However, most chemicals (almost 70%) are essential inputs for products and services provided by other industries. The continued high growth of the industry, which is estimated to make up to 95,000 substances across hundreds of product categories, is due to the constant flow of new and improved materials and products (DTI, 2003).

The chemicals industry spends nearly US$4.7 billion a year on new capital investment, and research and development expenditure is equivalent to more than 10% of sales (Chemicals Industry Association, 2001).

The chemicals industry production market – defined as the development, manufacture and sale of chemical products, including household, industrial and agricultural chemicals – grew by 5.4% in 2001, to reach a value of US$31 billion. In 2007 the production market is forecast to reach a value of US$36 billion (Chemicals Industry Association, 2002).

UK Strengths
The UK chemicals industry many strengths include:

Strongly committed to investing in research and development (R&D) for enhancing the existing product range and introducing new products.
Traditionally strong science base in chemistry provides firm foundation for industry.
The UK Government has used a pragmatic and business friendly approach to introduce new legislation on issues such as health and environment.
(Datamonitor, 2003)

Major Companies
Virtually all international chemical companies have operations in the UK. Based on 2002 revenues, the following companies are considered to be UK market leaders:

Royal Dutch/Shell Group
BP
Imperial Chemical Industries plc (ICI)
BOC
Croda
(Datamonitor, 2003)

Subsectors
Pharmaceuticals is the largest sector of the UK chemical production market, representing 25% of the market in value terms. Basic inorganics is the smallest sector, representing 4% of the market in value terms. The chart below shows the segmentation of the industry in 2002.

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Financial Services
UK Financial Services Industry
The UK is one of the world’s leading centres for international banking and financial services.
The financial sector makes a significant contribution to the UK economy, accounting for 5.3% of the total gross domestic product (GDP) in 2001. This is based on a definition encompassing banking, insurance, fund management, securities dealing, derivatives and venture capital. However, other sectors, classified as business services, are closely related to the financial sector, particularly accountants, legal services and management consultants, and together these account for an additional 3% of total GDP (International Financial Services, London [IFSL], 2001).

There were 1,067,000 people employed in the UK financial services sector in June 2002 (IFSL).

London – the Financial Capital of Europe
London is the largest international banking centre in Europe, with an estimated 50% share of European investment banking activity. It is the world’s top city for institutional equity holding and the most important over-the-counter (OTC) derivatives trading market, with 36% of the global turnover. London is also the leading international centre for Foreign Exchange trading, with 31% of global turnover (Key Note, 2002).

London’s leading role in the international financial services industry arises from a long history of openness, with relatively easy access to markets and a tradition of welcoming foreign firms, supporting a trading culture which dates back over a century to the time when the UK was the dominant world trading country.

Although London is an international center for Financial Services, other regions in the UK are prominent in the sector. For example, Birmingham has approximately 100,000 people employed in financial services and has the largest business and professional services sector in the UK outside of London. The sector is also predicted to create up to 60% of all new jobs in the region over the next five years (Annual Business Inquiry, 2001).

Figure 1 Number of branches and subsidiaries of foreign banks physically located in the UK (IFSL, 2002).

The Market
London has a significant presence in many international financial markets such as: foreign equity trading, international bond issuance and secondary trading, foreign exchange dealing, marine and aviation insurance and cross-border bank lending.

The UK is a world leader with:

19% of the world total of cross border bank lending (2002);
56% of the global market for cross border trading in foreign equities (2001);
31% of the world market for foreign exchange trading (2001);
36% of the global OTC derivatives market (2001); and
453 foreign companies listed in London, more than any other centre (2001).
(Bank of England, FSA, BIS, World Federation of Exchanges, Lloyd’s of London, ISMA, London Stock Exchange, IUA)
Banking
The UK enjoys one of the most diverse and dynamic banking sectors in the world (Figures 1 & 2). Total assets of the UK banking system were US$6,137 billion in November 2002, of which 52% belonged to foreign banks (IFSL).

According to a Key Note estimate, between 2001 and 2005 the value of the personal banking market is forecast to rise by 13.7% to US$305 billion at current prices (Key Note, 2001).

Figure 2 Number of branches and subsidiaries of foreign banks in the world’s top finance locations (IFSL, 2002).

 

[Blackleaf]

Britain is now the second-largest movie exporter in the world after the US. The UK generates FIVE TIMES the level of movie exports per unit of investment than France -



The last major review of the British film industry, the UK Film Policy Review, reported its findings on March 25, 1998. The following month witnessed a further opportunity to consider film policy at the European level at the EU Audiovisual Conference held in Birmingham. At that time, the MPA noted that:



"Despite accounting for only 15.7% of the EU's population and 14.1% of the EU's GDP, the UK can claim 28% of EU consumer spending on all audiovisual products and services and more than 26% of the EU consumer spending on films alone. Indeed, as measured against GDP, the UK outperforms the rest of the EU in every audiovisual sector, most strikingly in video rental and video retail, less dramatically in cinema, pay-TV and free-TV.

"The UK accounts for 35% of all multiplex screens in the EU and 30% of all spending on feature film production. 31% of the EU's movie channel subscribers are to be found in the UK, which also boasts the EU's biggest video market and a very healthy broadcast television sector. In recent years, the UK has experienced exceptionally high rates of growth in cinema admissions, satellite and cable penetration and pay-TV subscriptions. Forecasts show that the UK will be a major European winner in digital television.

"As the UK market has grown, it has become less, not more, dependent upon imported products. British film investment and output figures are at record levels. While British feature films on average perform poorly at the UK box-office, Britain continues to produce a succession of hit movies, of which The Full Monty, Bean and Mrs Brown are the latest examples. As a result, the UK is second only to the USA as a film exporting country, generating five times the level of exports per unit of investment as France. As for television, the UK is among the European territories that are least reliant on imported programs. Only one show in the top 20 to air on the major UK channels in 1996 was foreign in origin. In a week chosen at random, the TV ratings survey published by Broadcast magazine showed that only eight shows in the top 70 were not British. All eight were daytime shows from Australia.

"Imports nevertheless continue to play an important role, especially in helping to establish new services, for example in pay-TV.

"Also of great benefit to the UK are imported capital and expertise, with the USA taking a leading investment role in UK cinema, film and video distribution, merchandising, television channels, cable television and visitor attractions. The Motion Picture Association estimates that the US studios made a contribution to the UK audiovisual economy of more than $5 billion in the period 1990-94, while it is well known in the UK investment community that American telecommunications and cable operators have contributed the largest part of the $10 billion so far invested in UK cable. The US commitment to Britain mostly takes the form of long-term investments—for example, in cable networks and multiplex cinemas—that promise sustainable benefits in terms of employment, skills and competitiveness.

"As for the quality of the culture that is emerging from the UK's booming film and television industries, one has only to look at the verdicts of the world's leading film and television festivals. UK films and film-makers have captured 21% of all Oscars, 18% of major prizes awarded at the Cannes Film Festival and 15% of the prizes awarded at both Berlin and Venice since 1990. British television programs and program-makers dominate all the international awards, capturing 73% of the International Emmys, 32% of the prizes at Montreux and 31% at Monte Carlo since 1990.

"It is no exaggeration to say that the quality of UK films and television programs is the envy of Europe."
At the time, we attributed the UK's success to liberal regulation, inward investment, world class technical and craft skills and a great pool of talent. Nothing that has happened in the last five years would significantly change that analysis.


3 March 2003

 

[Blackleaf]

100 Best Workplaces in Europe 2004 list published

Europe

UK outperforms the rest of the EU again!

For the second consecutive year UK organisations outperformed their European counter-parts in the 100 Best Workplaces in the EU list. The second annual survey of the 100 Best Workplaces in Europe 2004 list was published with the UK's Best Workplaces in a Financial Times Special Report on April 28th 2004. 17 UK organisations were honoured among Europe's 100 Best, up from 13 UK organisations that appeared on the 2003 list. Three UK organisations -?What If!, Timpson and Microsoft - featured in the EU top-10, and for the first time a UK not-for-profit, social housing provider Bromford Housing, was also featured in the EU list.
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[Blackleaf]

And soon the UK will overtake even Germany to have the LARGEST economy in Europe -


UK economy 'set to be biggest in Europe'
British Information Services, 4 August 2004


In a research paper released last month, Christopher Smallwood, chief economic advisor at Barclays Bank, said Britain would soon overshadow Germany as Europe's chief economic powerhouse:

UK ON TRACK FOR ECONOMIC LEADERSHIP OF EUROPE

Figures issued by the International Monetary Fund show that, for the first time in many decades, GDP per head is now higher in the UK than in any of the other major European economies. What is more, research from Barclays indicates the gap in performance is set to widen steadily, so that within the next twenty years and despite its smaller population, the UK will overtake Germany to become the largest economy in Europe.




The IMF figures are shown in Table One. This shows that GDP per head in the UK is $30,200, which compares with $29,200 in Germany and $28,500 in France. Italy and Spain lag further behind. In absolute terms too the UK economy is now larger than all the rest - with the exception of Germany, where a sizeable gap is not surprising since Germany’s population is currently about a third higher than the UK’s. This too however is set to change. Research into the relevant long term trends strongly suggests that the gap is set to close steadily and within a couple of decades vanish altogether, leaving the UK unequivocally the leading economy in Europe.

What is the basis for this surprising claim? The starting point is the observation that a country’s long term rate of economic growth is determined by the growth in its workforce and the growth in the productivity of that workforce. Prospective growth rates can be calculated by projecting working population on the one hand, productivity growth (GDP/head) on the other, and adding the two together. In relation to both of these factors, the UK is relatively well placed.

As the first chart illustrates, the Government Actuary’s Department expects Britain’s workforce to RISE slowly over the next 20 years, as the population continues to GROW. It will decline modestly in the 2020s, as the population ages, but by 2030 will still be above today’s level. By contrast, Germany’s working population is set to DECLINE steadily from now on, at an accelerating rate, reflecting a collapse in the birth rate over the final quarter of the last century. By 2030, it will have dropped from 56 million to 44 million – a fall of more than 20%.

Germany’s workforce is projected to decline by 0.3% pa during the 2000s, 0.6% pa in the 2010s, and more than 1.5% pa in the 2020s. At present, productivity is struggling to grow by even 1% pa. If this performance were to persist, Germany’s trend growth rate would be less than 0.5% in a few years time, and negative in the 2020s. Hopefully, this won’t be the case. There is obviously growing determination in the country to put things right as the Agenda 2010 program shows. The question is how much can actually be achieved and how quickly.

Radical measures are needed – in Germany but also more widely in Europe – which may involve raising the pension age, increasing the flexibility of labor markets and opening the way to the speedier application of new technologies. But simply to list these measures is to illustrate the mountain Germany has to climb. They involve largely deconstructing the social market economy, which is strongly defended by powerful trade unions. Germany will solve its problems in the end, but rebuilding productivity growth will be a long, slow business.

On productivity, the UK’s position is quite different. Average productivity growth of 2% pa is well established. The Treasury assumes in the name of ‘caution’ that after 2010 productivity growth may drop a shade, perhaps to 1.75% pa to 2030. With the reforms Germany is striving for already in place here, it is difficult to see why this should not be the case.




When we combine these projections, the resulting picture is shown in the second chart. The rise in German GDP shown here credits German governments with making steady progress in raising productivity growth, from a starting-point of less than 1% pa, to 2% pa by the 2020s – a high rate which has not been achieved since the early 1990s. In addition, it assumes that the efforts to increase participation in the labor force will more than counteract the reduction in the numbers of people of working age during this decade, and will offset half the much larger drop which is due to take place in the 2010s. In other words, the reform program largely meets its objectives. By the 2020s however whatever can be done in this respect will have been done, so that the full force of declining numbers makes itself felt. On this basis, long term growth rates for Germany come out at 1.5% pa up to 2010, 1.25% pa in the 2010s, and 0.5% pa in the 2020s.

The UK line assumes 2.5% trend growth until 2010. For the 2010s and 2020s it assumes trend productivity growth of only 1.5% pa – more conservative than Treasury assumptions. This results in GDP growth of around 2% pa during the 2010s, since government actuaries expect an increase in female participation; and of 1.25% in the 2020s as productivity growth is offset by a modest decline in the workforce. The assumptions relating to the UK are deliberately cautious, yet even so the British economy steadily closes the gap with Germany until, early in the 2020s, it becomes bigger than Germany – and thereafter the gap continues to WIDEN in Britain’s favor.

 

[Wetcoast40]

Thanks for the economics lesson, Blackleaf. Obviously I grossly underestimated their economy. Living with West Coast weather is like living with the weather in Southern England and that "aint all that bad".

 

[Wetcoast40]

By the Bye, Blackleaf, what's your source for this good information.