In many ways, being a flourishing multi-cultural and multi-ethnic state has made the United Kingdom an unparalleled success story. It has a vibrantly creative arts sector, a National Health Service which guarantees care for its citizens, as well as globally renowned scientists that extend boundaries of knowledge.
Business expert Kavan Choksi further points out that the UK is also brimming with several innovators and entrepreneurs who develop services and products that bring joy and jobs to many. All of these factors contribute to the economy of the nation.
Kavan Choksi marks a few key pillars of the economy of the UK
The very first pillar of the United Kingdom’s economy is its diversity. The country has deep-rooted ties to trade, which is reflected in its diversity. The GDP of the UK is driven by many sectors, starting from manufacturing and finance to agriculture and tourism. This diversity essentially aids in insulating the economy of the country from shocks in any specific sector. For instance, a downturn in the automobile industry can be offset by strong performance in financial services or agriculture. This diversification also provides the economy of the UK with a good degree of resilience and stability.
Recently the country underwent many difficult challenges due to Brexit and the Covid-19 pandemic. Even though these challenges were not easy to overcome, the diversified economy of the UK has helped cushion the blow and make sure that the nation stays on a path of economic growth.
The second most important pillar of the UK’s economy is its strong currency. The British Pound Sterling is among the most widely traded currencies on the planet. In fact, it is also considered to be a reserve currency by many central banks. A strong currency has the capacity to create stability for consumers and businesses, and also helps attract foreign investment.
Kavan Choksi states that for businesses, a strong currency implies buying goods and services at a lower price, which makes them more competitive. On the other hand, for consumers, a strong currency would mean that they get to purchase imported goods at a lower price. As investors become more confident that their money shall retain its value, a strong currency can also be quite helpful in attracting foreign investment. Being vital to the stability and prosperity of the nation, its currency is definitely among the top pillars of the UK’s economy.
A robust labor market and strong public finances can be considered to be the third and fourth major pillars of the UK’s economy. The unemployment rate in the United Kingdom is around 4%, which is below the OECD average of 5%. Such a low unemployment rate indicates that there are adequate job opportunities for workers across the nation.
Taking about the strong public finances of the United Kingdom, it is important to note that the government’s budget deficit stands at just 2% of GDP, which is below the 3% limit set by the European Union. Moreover, the government also has a large pool of tax revenue to draw from, due to the high-income tax rates of the country.