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Economic Structure of Great Britain

As in all European countries, the economic system in Britain is a mixture of private and public enterprises. From 1945 until 1980 the general trend was for the state to have more and more control. Various industries were nationalized, especially those connected with the production and distribution of energy. So were the various forms of transport and communication services (as well, of course, as the provision of the education, social welfare and health welfare).

From 1980 the trend started going in the other direction. The government of the 1980s pursues the ‘let market force rule’ policy (which meant restricting the freedom of business as little as possible). State-owned companies were turned into companies owned by individuals (who became shareholders). Since 1980 a large number of companies have been privatized such as British Airways, British Gas, British Petroleum, British Steel and British Telecom and the water and electricity supplies. The government privatization programme has had a major effect on share ownership. In 1992 over one-fifth of the adult population in Great Britain owned shares, compared with one in thirteen in 1979.

Now the public sector (which includes the nationalized industries and public services provided by local and central government) amounts to one-third of the total goods and services in the economy, and employs about one-third of the national workforce. Two-thirds of the economy is in the private sector, although this will increase as more privatization is implemented.

The public sector consists of small private businesses which are owned by individuals; ‘public’ companies whose shares are sold to the general public through the Stock Exchange; and larger private companies whose shares are not offered for sale to the public. The majorities of companies in Britain are private and most are small or medium-size. They are important to the national economy because they generate 50 per cent of the workforce. Some 10 per cent of the economy is controlled by foreign private corporations, which employ 10 per cent of the workforce.

Two parallel developments have affected Britain slightly more than most other European countries. One is the increase in the service industries, as distinct from manufacturing ones. The other is the increase in the proportion of people in white collars as distinct from manual jobs.

There has been some growth in the number of people who work for schools and hospitals, social services, the police, and in public administration. But the bigger growth has been in finance, banking and insurance, along with other services, including the law, advertising, catering and entertainment.

Another recent change has been in the growth of self-employment, the number of people working for themselves has increased. Small businesses employ more than a third of the private sector workforce and are responsible for one-sixth of total turnover. The government provides financial assistance and guidance to help with problems facing small companies.