Chapter 4 The UK Economy,Key points,Absolute decline and relative declineRecent historyThe current UK economy The UK Economy in 2009UK Economic Forecast,Absolute Decline and Relative Decline,By the 1880s, the British economy was dominant in the world, producing one third of the worlds manufactured goods, half its coal and iron, and half its cotton.But by 1900, the UK has been overtaken by both the United States and Germany.,Before WWII,British economy became dominant(占支配地位的) in the world. colonisation industrial revolution,Question: What made British economy became dominant in the world?,The factory of the world (the workshop of the world)a. 1/3 of the worlds manufactured goods.b. produced half its coal and iron; half its cottonc. shipping amount greater than that of the rest of the world put togetherHowever, since 1900, especially after civil WWII, Britain not only gave up its economic hegemony(霸权) but also lost its industrial leadership.,From 1900 to 1945 (the Pre-war era) only second to the U.S. in the international economy, this indicated some sort of decline. a. having been overtaken by the U.S. and Germany b. remains one of the Group of 7 large industrial economies c. steady economic growth and rapidly increasing living standards,From 1945 until the present, the story of the UK economy is usually thought of as one of decline.Question: Is this statement true? What are the reasons for describing this period as one of decline?,The Reasons for the Relative Decline of UK Economy,First: After World War II, the UK had gone heavily into debt in order to finance the war, selling many of its accumulated overseas assets, and borrowing large amounts from the US and Canada. Second, the era of empire was over. the independence of its colonies makes Britain lose big markets for British goods, and the independent colonies stopped providing raw materials to the UK, leaving Britain as just a medium-size European country.,Third, Britain spent a higher proportion of national wealth on the military than most of its competitors. (decolonization, a member of NATO, a member of the UN Security Council.)Fourth, its industry survived almost unaffected during the war so that British could continued with its older factories and pre-war products.,Facts showing the UK Economys Relative Decline,Britain is a lot more wealthier and more productive than it was in 1945; however, other countries have improved more rapidly, and the UK slide from being the 2nd largest economies to being the 6th.,Rank order country GDP GDP (per capita ) growth rate 01 USA 137532.87亿美元 45668美元 2.2% 02 JAPAN 51034.63亿美元 40055美元 2.0% 03 GERMANY 30243.34亿美元 36698美元 2.6% 04 CHINA 28792.26亿美元 2177美元 11.4% 05 UK 24718.72亿美元 40669美元 2.9% 35 HONG KONG 2045.02亿美元 29298美元 5.8% (CIA statistics, Feb. 12, 2008）,世界主要经济体排名,2012年世界各国GDP最新排行榜,2012年，中国GDP达52万元，按照2012年末的汇率，折合8.3万亿美元；而日本受经济下滑的影响，名义经济总量和汇率双双下降，2012年日本GDP折合5.3万亿美元。 2012年，世界各国经济GDP排名依次为1、美 国: 15.83万亿美元,实际增长率为2.2%2、中 国: 8.3万亿美元, 实际增长率为7.8%3、日 本: 5.3万亿美元, 实际增长率为1.7%4、德 国: 3.4万亿美元, 实际增长率为0.7% 5、法 国: 2.6万亿美元, 实际增长率为0.4%6、英 国: 2.5万亿美元, 实际增长率为-0.3%7、巴 西: 2.3万亿美元, 实际增长率为1.03%8、意大利: 2.1万亿美元, 实际增长率为-2.3%9、俄罗斯: 2.0万亿美元, 实际增长率为3.5%10、印 度: 1.8万亿美元, 实际增长率为5.3%,Recent History,The British economy went through a particular bad period in the 1970s.following the severe shock of the 1973 oil crisis and the 19731974 stock market crash, the British economy went into recession in 1974, with GDP falling by 1.1%, recording weaker growth than other European nations in the 1970s overall.,Results: Workers struck for more pay. The government was in debt. The British industry appeared to be doing badly, with increasing imports relative to exports.,Solution: a change of governmentIn 1979, the British people voted in the Conservative Party under Margaret Thatcher, with the promise of a radical program of reform.Question: 1. What reform did her government carry out? 2. Was the reform successful?,Margaret Thatcher,Margaret Hilda Thatcher (born 13 October 1925) ,served as Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990.,She came into power as Britains first woman Prime Minister in 1979 when her Conservative party won the general election. She advocated the idea of small government and free-market economics. During her term as the Prime Minister, she carried out policies to privatize the nationalized industry and to cut tax rate. As a result, many businesses boomed but unemployment rate increased. She was later replaced by John Major in 1990.,The Thatcher government adopted an economic programme known as Medium-Term Financial Strategy:privatisationderegulation(放松管制、解除管制)market liberalisation(自由市场),Positive consequences: The inflation was under control. Companies were more efficient, being able to pay higher wages and make higher profits.Negative consequences: A rapid increase in unemployment The public services became worse.The national economy as a whole continued to grow at lower rates than its competitors.,