IV.

Economy

The United Kingdom is one of the world’s leading commercial and industrialized nations. In terms of gross national product (GNP) it ranks fifth in the world, after the United States, Japan, Germany, and France. In 2004 Britain’s GNP was about US$2,013 billion, equivalent to US$40,560 per capita. In 2006 gross domestic product (GDP; market prices) was about US$2,377 billion (approximately £865 billion). Major industries, such as transport, communications, steel, petroleum, coal, gas, and electricity, which had been nationalized by Labour governments, were sold to private investors by the Conservative government in the 1980s and the first half of the 1990s.

Britain has made great achievements in science, invention, and technology and has a long research tradition. The Nobel Prize has been won by more than 70 British scientists. In the 20th century, contributions included, among many others, the discovery of the molecular structure of DNA (1953) and subsequent breakthroughs in medicine and genetics (such as gene therapy, computerized tomography, magnetic resonance imaging, and in vitro fertilization—the world’s first “test-tube” baby). British scientists have also advanced the fields of astrophysics and superconductivity (extremely high electrical conductivity at low temperatures).

In January 1973 Britain became a member of the European Community (EC; now the EU). Since the end of World War II several economic problems have persisted, such as pressure on the currency, a deficit on the overall balance of payments, inflation, and until recently industrial inefficiency. During the 1974 world recession these problems became more critical: unemployment rose to more than one million, productivity declined, wages soared, and the currency sank to record lows. In July 1975 the government introduced stringent anti-inflation measures that were supported by both business and the trade unions, and were regarded as largely successful in holding down wage increases and dampening inflation. Major improvements in the balance of payments occurred in the late 1970s because of the revenues from North Sea oil.

Since 1979 government economic policies have encouraged the private sector while curbing government spending and services. Under the Conservative governments of the 1980s and 1990s the maintenance of low inflation was the government’s priority, but at the cost of historically high unemployment levels. The Labour government elected in 1997 sought to continue the low-inflation policy. Unemployment levels exceeded 3.5 million in the mid-1980s but were about 1.65 million by April 2004 (the unemployment rate being 4.6 per cent), and by the turn of the century had dropped to under 1 million, the lowest figure for 25 years. The annual national budget deficit in 2006 was equivalent to about 3.22 per cent of GDP.

In the late 1990s a major economic policy question for Britain was the terms on which it participates in the financial and economic integration of Europe. In particular, the United Kingdom will have to decide if and when it will join the single European currency—the Euro.

A.

Agriculture

About 77 per cent of the land area of Britain is under agricultural use of some sort. However, the sector’s role in the economy is much smaller than in most other major industrialized countries, in terms of employment and contribution to GDP, reflecting Britain’s early industrialization. Agriculture employs around 1 per cent of the population and contributed 0.9 per cent of GDP in 2006. However, it achieves high levels of efficiency and productivity. Britain is self-sufficient in 60 per cent of all types of food and animal feed.

Large parts of Britain, notably in Scotland and Wales, are suitable only for grazing. Overall, in the second half of the 1990s about 48 per cent of agricultural land was under pasture, another 27 per cent under rough grazing, and the remainder under crops or lying fallow. There were around 244,000 farm holdings, 75 per cent of them owner-occupied, with an average size of just over 70 hectares (173 acres). However, some 44 per cent of farms were considered to be of the minimum size to provide a full-time living, or smaller (see Smallholding).

Over half of all full-time farms are devoted to dairy- or beef-farming, or sheep. Britain in 2006 had an estimated 10.2 million cattle, 34.7 million sheep, 4.93 million pigs, and almost 173 million poultry. Cattle and sheep contribute more than 40 per cent of the value of gross agricultural output.

An outbreak of swine fever in Britain led to the slaughter of about 12,000 pigs and the isolation of farms in August 2000. It was the country’s first outbreak in 14 years. Far more serious to the farming industry was the outbreak in February 2001 of foot-and-mouth disease, the first outbreak since 1967. The North-West of England, Devon, and the Scottish Borders were particularly badly affected. At the end of September 2001 the number of confirmed cases stood at over 2,000, which had led to the slaughter, and then burial or burning, of almost 4 million animals.

The treatment of farm animals is of growing concern in Britain. Opposition by a section of the public to factory farming of chickens for eggs and meat is long-standing. However, during 1995 there were major protests at a number of English ports over the export of calves to continental Europe for veal production. In 1996 increasing concern over the possible links between bovine spongiform encephalopathy in the British beef herd and Creutzfeldt-Jakob Disease in human beings who may have eaten infected beef products led to the temporary collapse of consumer confidence in the safety of British beef and an EU ban on the export of cattle products. Sales of beef in British supermarkets revived in 1997.

Arable farming is concentrated mainly in eastern and south-central England and in eastern Scotland. The main crops (2006 production, tonnes) grown are: wheat (14.7 million), sugar beet (7 million), barley (5 million), potatoes (5.68 million), and oilseed (1.92 million). There is also a significant horticultural industry producing a variety of vegetables, orchard and soft fruits, and bulbs and flowers.

The high productivity of the arable sector—one of the most efficient in Europe—has been achieved by the removal of hedgerows to create larger fields, by mechanization, and by the intensive use of fertilizers, pesticides, and fungicides. As with the issue of animal treatment, these trends in arable agriculture have provoked public concern. Combined, these concerns have helped encourage the rapid growth of vegetarianism in Britain since the early 1980s and the expansion of organic farming, although this is still on a very small scale. However, partly in reaction to these concerns, and partly because of costs, the trend is now towards lower chemical use in farming.

B.

Agricultural Policy

Agricultural policy in the United Kingdom since 1973 has been determined primarily by the Common Agricultural Policy (CAP) of the EU, which aims to ensure stable markets, a fair standard of living for producers, and regular supplies of food at reasonable prices for consumers. The costs to EU taxpayers of the CAP, which accounts for more than 50 per cent of the EU’s budget, and the mechanisms of maintaining farm prices through grants and subsidies, and through tariffs on cheaper imports, have come under increasing criticism since the early 1980s by Britain, by developing countries, and by the United States.

Various reforms have been implemented in an attempt to reduce costs, subsidies, and the huge levels of overproduction that generated “butter mountains” and “wine lakes” during the 1970s and 1980s. These have included schemes to encourage farmers to take land out of agricultural production, to adopt more environmentally kind, but less productive methods of farming, to impose production quotas on certain products, like milk, and to reduce subsidies for the production of others.

In Britain agricultural marketing is carried out by private traders, producers’ cooperatives, and marketing boards for certain products. The number of marketing boards has been steadily reduced over the past 20 years. In November 1994 one of the largest, the Milk Marketing Board for England and Wales, ceased to exist and was replaced by a producers’ cooperative, Milk Marque.

Britain’s food industry is one of the world’s largest (per capita) and most successful, with a highly developed retail, supply, and distribution network. Its supermarket chains (now known as food giants) supply an ever-increasing choice of food products to the British consumer and are among Europe’s most profitable companies.

C.

Forestry

The approximately 3 million hectares (7 million acres) of woodlands in Britain cover about 7 per cent of England, 15 per cent of Scotland, 12 per cent of Wales, and 5 per cent of Northern Ireland. The most common trees are oak, beech, ash, and elm. Pine and birch predominate in Scotland. Production of roundwood totalled about 8.40 million cu m (297 million cu ft) in 1994. Sawnwood production in 2006 came to approximately 2.89 million cu m (102 million cu ft). The Forestry Commission began a reforestation programme in the 1950s, under which approximately 16,000 hectares (40,000 acres) were replanted annually, mostly in Scotland.

Private owners, who hold 62 per cent of the total forestlands, have been encouraged to replant some 8,000 hectares (20,000 acres) each year. New plantings in 1994 totalled 17,300 hectares (42,749 acres), of which private owners accounted for almost 92 per cent (15,900 hectares/39,290 acres). The reforestation of an additional 65,000 hectares (160,000 acres) in Northern Ireland is also planned. Despite these efforts, however, Britain still imports more than 85 per cent of its timber.

D.

Fishing

The fishing industry provides about 55 per cent of British fish supplies and involves both deep-sea fishing and fish farming. The deep-sea industry has declined since the 1960s, in part because of conservation restrictions legislated by the EU; it remains most important to the economy of Scotland and parts of south-western England, and is a major source of employment in certain ports.

In 2005 the total fish catch was about 0.84 million tonnes, of this figure 829,625 tonnes was the marine (or deep-sea) catch. The main catch species include mackerel, cod, haddock, whiting, angler fish, hake, plaice (various flatfishes, including flounder), herring, and shellfish. The principal commercial freshwater fishes are salmon, trout, and eel; the first two now mainly come from fish farms.

Notable fishing ports include Hull, Grimsby, Fleetwood, North Shields, Lowestoft, Plymouth, Brixham, and Newlyn in England; Aberdeen, Peterhead, Lerwick, Ullapool, and Fraserburgh in Scotland; and Kilkeel, Ardglass, and Portavogie in Northern Ireland. The British fishing fleet consists of 9,174 vessels. Not all of these, however, belonged to British fishers; a significant minority of UK-registered vessels are owned by non-Britons, notably citizens of other EU-member states.

E.

Fishing Policy

As with agriculture, fisheries policy in Britain is largely determined by the EU, through the Common Fisheries Policy (CFP). A long history of overfishing in European waters has led to the imposition of increasingly strict quotas through the CFP as part of measures aimed at protecting remaining fish stocks and allowing them to recover. With one of the EU’s largest fishing fleets, Britain has been particularly affected by such measures. Boats have had to spend many days a year forcibly laid up and the government has implemented financial schemes to encourage people to leave the industry.

At the start of 1996 traditional British and Irish fishing grounds, known as the “Irish Box”, were opened to Spanish boats under a December 1994 agreement. Narrowly ratified by the British parliament in January 1995, the agreement had caused considerable friction between British and Spanish boats during the year, including various incidents of net-cutting. The arrival of the Spanish boats in the Irish Box led to a resurgence of complaints from the British fishing industry, particularly after the EU indicated plans to cut back on British fishing quotas.

The European Court of Justice ruled in March 1996 that compensation claims made by Spanish fishing vessel owners previously kept out of British waters could go ahead. Further demands were made by the European Commission for a 40 per cent reduction in the British fishing fleet over a six-year period.

F.

Mining

Britain has a variety of minerals, notably coal (see Energy below) and iron ore; the juxtaposition of deposits of these two was a key element in the country’s early industrialization. The location and historical importance of these and other mineral deposits is reflected in Britain’s population distribution and in the development of certain towns and cities. Mining in Britain has an ancient history. Salt mining, especially in Cheshire, dates back to prehistoric times. In the pre-Christian era, Phoenician traders visited what is now England to barter for tin from the mines of Cornwall. These tin deposits are now almost completely worked out, as are the iron ore deposits of northern England.

Today, construction raw materials form the bulk of non-coal mineral production. Some zinc, lead, and gold are produced; gold mining occurs in Wales. Ownership of gold and silver (as well as oil and natural gas) in Britain lies with the Crown, and producers can only obtain production leases. Virtually all other mineral sources are privately owned. Output of non-coal minerals includes (1995 figures, tonnes): limestone and dolomite (112.6 million), sand and gravel (101.7 million), sandstone (19.8 million), common clay and shale (13.9 million), salt (4.8 million), and china clay (2.6 million). Cornwall’s last remaining mine, South Crofty, produced 1,922 tonnes of tin-in-concentrate in 1994—some 20 per cent of domestic demand.

G.

Energy

Britain has the greatest energy resources of the EU, and is a significant world producer of oil and natural gas. The other main primary energy sources are coal and nuclear power. Water power, although the main energy source for the early stages of Britain’s industrialization, is today little used except in Scotland, which has a number of hydroelectric power stations. Alternative energy sources are just starting to be developed, notably through the construction of so-called wind farms in parts of northern and south-western England, Wales, and Scotland.

Large parts of the island of Great Britain are underlain by coalfields, and coal mining can be traced back to Roman times. Taxes on coal sales helped pay for the rebuilding of London after the Great Fire of London (1666), and coal was the key energy source of the Industrial Revolution.

Production reached a peak in 1913 when the industry produced 292 million tonnes, exported 74 million tonnes, and employed 1 million people. Since then it has been in decline. The main cutbacks in the coal industry have occurred over the past 20 years, however, and particularly since the end of the bitter, year-long miners’ strike. When the coal industry was nationalized (see History below) in 1947, some 200 million tonnes were produced by almost 900 pits. By the end of 1992, when the British Coal Corporation offered 28 collieries for lease to the private sector as the first stage of privatization, production was under 84 million tonnes, and there were just 50 pits remaining. Fewer than half of these were still in operation by the time British Coal was privatized in January 1995, and production was down to some 60 million tonnes. In 2003 some 27.8 million tonnes of coal was produced. Employment in the industry had dropped from around 200,000 in 1985 to around 11,000 a decade later, with enormous social consequences for the mining communities of areas like Yorkshire, Nottinghamshire, Derbyshire, and south Wales.

The decline in the industry has reflected the loss of domestic and export markets to cheaper overseas producers, even though modernization and mechanization programmes have made the British coal industry one of the world’s most efficient and productive, on a per capita basis. Other factors have included the phasing out of subsidies to the coal industry by the Conservative government from 1979 to 1997, and growing concerns about the adverse environmental impact of coal-burning. Almost three quarters of British coal comes from deep mines, the rest from opencast mines, and, notwithstanding the industry’s problems in recent years, some 25 per cent of British energy is still supplied by coal.

Oil was first discovered in 1969 under the bed of the North Sea, off the coast of north-eastern Scotland; production began in 1975. By 1980, 15 fields were producing 1.6 million barrels a day—virtually all of Britain’s requirements—and oil was becoming an important source of export revenue as well. Production of natural gas from the North Sea fields off the coast of eastern England began in 1967 and has steadily increased. New offshore oil and natural gasfields have been located since 1980, and small onshore oil deposits have been discovered, notably at Wytch Farm in Dorset, southern England.

By 1996 Britain was the world’s ninth-largest producer of oil, with some 96 productive offshore oilfields (1997), and the fifth-largest producer of natural gas, with 48 offshore gas fields. Output of crude oil in 1997 totalled some 2.09 million barrels a day; output of natural gas amounted to 102,841 million cu m (3,631,795 million cu ft).

Britain was a pioneer in the development of nuclear power plants. The world’s first commercial-scale nuclear power station at Calder Hall, Cumbria, north-western England, became functional in 1956. By 2006, 23 nuclear power stations generated about 23 per cent of Britain’s electricity. Of the remainder, about 47 per cent is generated by coal power stations, 5 per cent from petroleum, 16 per cent from natural gas, and hydroelectric power stations and other renewable fuels account for the remainder. Annual electricity output in 2003 exceeded 369.9 billion kWh, of which around 35 per cent was taken by households and 32 per cent by industry. The majority of the electricity industry was privatized in 1989; the nuclear power stations, as British Energy, in 1996; and British Gas in 1986.

H.

Manufacturing

By the mid-19th century Britain was an industrialized nation, the world’s first. The main causes of its early development in this area included: Britain’s early leadership in the wool trade; a favourable climate; mineral wealth; the development of shipping and naval control of the seas; the acquisition of colonial markets; a much greater freedom from political and religious wars and persecution than elsewhere in Europe; the development of more efficient manufacturing methods, such as the factory system, and labour-saving machinery; and the agricultural revolution. This last, which preceded and paralleled the Industrial Revolution, was very important. Improved production methods, crops, and breeds of animals, as well as mechanization, boosted food production to feed the burgeoning towns. It also freed thousands of agricultural labourers to work in the new factories.

The 16th- and 17th-century influx of Flemish and Huguenot immigrants during the Protestant Reformation gave great impetus to the wool industry, the foundation of Britain’s medieval economy, and introduced new industries such as silk-weaving, garment-making, and the manufacture of hats, pottery, and cutlery. With the invention of mechanically powered machinery the textile industry grew rapidly to become one of the most important industries of Britain. Improvements and development of early steam technology by two Scottish engineers, James Watt and George Stephenson, were of major importance in British industrialization generally, and in the development of the coal industry, and iron and steel manufacturing in particular. Britain’s wealth by the mid-19th century was based on the manufacture of iron and steel, heavy industry, shipbuilding, coal mining, textiles, and trade.

Today, Britain is still an important manufacturing country, despite the many problems facing the sector since the 1970s, including foreign competition and the detrimental effects of the recession of the 1980s. In 2004 manufacturing accounted for 15 per cent of GDP, while 76.4 per cent of visible exports consisted of manufactured or semi-manufactured goods. However, employment in the sector has fallen as firms have closed or new technologies have been brought in to raise productivity. In 1995 some four million people were employed in manufacturing (16.5 per cent of the workforce).

The structure of industry has changed substantially in the past 25 years. The traditional industries, which by the 1930s had expanded to include motor vehicle production, have generally been much reduced in overall size—although individual firms like British Steel and, in textiles, Coates Viyella and Courtaulds Textiles are among the biggest in the world in their respective fields. There has been a growth of high-technology industries, such as pharmaceuticals: Britain is one of the world’s top three producers of pharmaceuticals and is a pioneer in biotechnology. Glaxo Wellcome is one of the world’s largest pharmaceuticals companies and London is the headquarters of the European Medicines Evaluation Agency, which is responsible for licensing of drugs on an EU-wide basis. Britain is also a world leader in electronics, aerospace, and the manufacture of offshore oil equipment, in which the country has pioneered a number of technologies involved in drilling, seismic surveying techniques, and rig construction. By the early 1990s Britain was making some 40 per cent of Europe’s desktop computers, as well as being a world leader in the supply of communications equipment, including fibre-optic cables.

In 1995 the approximate production figures of some important products were: 17.6 million tonnes of finished steel, 1.5 million passenger cars, 80,000 tonnes of worsted and woollen yarn, and 207.9 million tonnes of synthetic fibres. In terms of the value of output the most important industrial sectors were: food and beverages; electrical and optical equipment; pulp, paper products, printing and publishing; chemicals and synthetic fibres; machinery; transport equipment; and textiles and leather products.

Scotland and Northern Ireland have long been noted for their production of whisky and textiles, notably tweed and linen respectively. Scotland today, however, is also a major producer of computers. The leading traditional manufacturing regions of England are Greater London and the metropolitan counties of Greater Manchester, West Midlands (Birmingham); South Yorkshire; and Tyne and Wear. Electronics and other newer industries are also concentrated in parts of south-east and western England.

I.

Tourism

Tourism is an essential part of invisible income and an increasingly important economic sector, employing at least 7 per cent of the workforce. In 2006 it contributed some US$63,094 million in receipts to the economy. Britain is one of the world’s top tourist destinations, attracting 30.7 million overseas visitors in 2006—more than a 50 per cent increase over the early 1980s. Under the Development of Tourism Act of 1969, a government organization, the British Tourist Authority, was set up to attract overseas visitors and to improve tourist accommodation and travel conditions.

J.

Currency and Banking

The pound sterling (£1), of 100 new pence, is the basic unit of currency (£0.49 equalled US$1; early 2008). In 1968 Britain took the first step in a three-year conversion of its currency to the decimal system of coinage by introducing the first two new coins, the 5-pence piece (equal to one old shilling) and the 10-pence piece. In 1969 the 50-pence coin was introduced, replacing the old 10-shilling note. The conversion was completed in 1971. The pound was permitted to float against the dollar and other world currencies beginning in June 1972.

The Bank of England, chartered in 1694, was nationalized in 1946, and it is the sole bank of issue in England and Wales. Several banks in Scotland and Northern Ireland may also issue currencies in limited amounts. Great Britain has, in addition, some 19 major commercial banks with more than 10,000 domestic and overseas branches, most of which are offices of the four leading banks: Lloyds TSB, Barclays, NatWest, and HSBC (formerly the Midland). Some banking services are provided by the postal system, savings banks, and cooperative and building societies. Following the election of a Labour government in 1997, the Bank of England was given operational independence in monetary policy, with responsibility for setting base interest rates.

There are also a number of domestic clearing banks, discount houses, and other financial institutions, such as the London Stock Exchange, and Lloyd’s insurance market, linked to Britain’s (essentially London’s) role as one of the world’s leading financial centres. In 1994 there were some 486 banks registered in the United Kingdom, as well as many other banking and non-banking institutions. Banking, finance, insurance, and leasing services accounted for about 25 per cent of Britain’s output, a substantial rise over a decade earlier, and 13 per cent of employment. In the mid-1990s about 16 per cent of the workforce was employed in the banking and finance sector. Net overseas earnings were around US$25 billion (£15.6 billion).

Historically, the financial services industry has been based in the famous “Square Mile” in the City of London. This remains very much the case today, even though Leeds, Manchester, Cardiff, Liverpool, Edinburgh, and Glasgow have developed as financial centres in recent years. The City of London, however, has the greatest concentration of foreign banks in the world and accounts for 20 per cent of total international bank lending. It also has one of the world’s largest insurance markets, is the world’s top centre for trading overseas equities, has one of the world’s largest financial derivatives markets, and is a leading market for trading commodities such as copper, gold, cocoa, and coffee.

The financial services sector expanded particularly fast after the deregulation of the Stock Exchange, or “Big Bang”, in 1986, developing new markets and products, and taking on large numbers of new employees. The recession of the early 1990s led to many workers being made redundant, and the sector was also hit by a number of problems and scandals, but a revival took place in the mid-1990s.

K.

Commerce and Trade

Foreign trade has been of vital importance to Britain for hundreds of years. Britain’s prominent position in world trade during the 18th and 19th centuries resulted largely from the geographical isolation of the British Isles from the wars and political troubles that afflicted the centres of trade on the Continent. The development of the great trading companies, such as the East India Company and Hudson’s Bay Company, colonial expansion, and naval control of the seas were corollary factors.

Before the 17th century the foreign trade of England was almost completely in the hands of foreigners. Wool was the principal export and manufactured goods were the chief imports. Under the mercantile system, which in England was the prevailing economic theory of the 17th and 18th centuries, the government fostered foreign trade, the development of shipping, and trading companies. As the number of British overseas possessions increased in the 18th and 19th centuries, the raising of sheep for wool and mutton became a major occupation in the colonies. The practice of exporting wool from Britain and importing manufactured woollen articles was gradually replaced by the import of wool and the manufacture and export of yarns and fabrics. Cotton textiles, iron and steel, and coal became significant British exports.

Today, Britain is the fifth-largest trading nation, exporting more per capita than the United States and Japan. It is also, through membership of the EU, and since January 1994, a member state of the European Economic Area, the world’s largest trading bloc. Its major imports are foodstuffs, wood and paper products, machinery, chemicals, transport equipment, textile yarn and fabrics, other manufactured goods, and automatic data-processing equipment. British exports include machinery, transport equipment, basic manufactured goods, petroleum, chemicals, iron and steel products, precision instruments, and aerospace and electronics goods and equipment.

In 1995 exports totalled US$348 billion (approximately £157 billion); imports US$461 billion (about £172 billion). Britain’s trading partners have changed radically since its accession to the EC (now EU) in 1973. Trade with the countries of the former British Empire, which was once dominant, now accounts for only a small minority of both exports and imports. The EU now accounts for more than 50 per cent of both exports and imports; trade with Asia and Oceania about 15 per cent; and with North America another 13 per cent. In terms of individual countries Germany, the United States, France, and the Benelux countries are Britain’s most important trading partners.

Such merchandise trade accounts for only a part of Britain’s overall trade. The trade in services—including banking and tourism—investment income, and other non-tangibles, known together as invisibles, is just as important to the British economy, if not more so. Britain is in the world’s top three in terms of invisible earnings, accounting for 5 per cent of the world’s exports of services and 14 per cent of its investment income. In 1993 earnings from invisibles totalled about US$185 billion (£116 billion), of which services accounted for about one third.

Most domestic retail trade is conducted through independently owned shops, department, chain, and cooperative stores, and supermarkets; the last named are operating on an increasing scale. More than half of all wholesale trade takes place in London.

L.

Labour

The total British labour force in 2006 was about 30.8 million, of whom over 28 million were in work. Although the majority are employees rather than self-employed, there has been a significant increase in small businesses. There were more than 3.5 million self-employed workers in mid-2002. The structure of employment has undergone significant changes in the past 40 years. Around 80 per cent of employees now work in the services sector, compared with about one third in 1955. Manufacturing, once the largest employer (1955, 42 per cent), now accounts for only 15 per cent of employees. An inherent part of this change has been a shift away from manual to non-manual occupations. There has also been a large increase in the number of women working outside the home since the mid-1950s; today women account for almost half of the workforce. More recent trends include an expansion of part-time employment, and a rise in the number of employees on short-term contracts instead of in permanent jobs.

Official figures show that unemployment, down from the peak of over 3 million reached during the recession of the late 1980s, amounted to more than 1.65 million in 2004, or 5 per cent of the workforce. It had dropped further to under a million by mid-2002. Unemployment, the figures of which are based on the number of people claiming unemployment benefit, varies considerably according to region, ranging from 3.9 per cent in the South-East, to 8.4 per cent in Northern Ireland.

Britain was one of the cradles of the trade union movement, but the influence of trade unions has declined dramatically since 1980. The changes in the structure of employment, including the shift away from manufacturing, the rise in smaller firms, the increase in part-time employment, and the contracting out of work have all militated against trade union membership. By 2000 there were 7.8 million registered members of 230 trade unions affiliated with the Trades Union Congress, or 29 per cent of employees. Legislation introduced by the Conservative government since 1980—including the requirement for secret ballots before strike action and changes in the law on the establishment of political funds by trade unions—has also reduced union power.

M.

Shipping

The irregular coastline of the British Isles, with its numerous indentations and bays, and navigable rivers, together with the artificial improvement of harbours and the provision of dock facilities helped Britain grow into a maritime power. The Navigation Acts of the 17th and 18th centuries were instituted to give English vessels maximum advantage in the carrying of English products. Naval victories over Spain and France, England’s chief rivals in world trade, gave the nation control of the seas and pre-eminence in world merchant shipping. This leadership lasted until World War II, when the destruction of British shipping by enemy action and the increased production capacity of US shipyards enabled the American merchant marine to overtake and surpass the British merchant fleet. It has since slipped further down the league table.

In the mid-1990s British companies owned 637 trading vessels, of 12.1 million deadweight tonnes, a near 50 per cent decline over a decade earlier. Most of Britain’s 80 commercially significant ports now rely on coastal trade. Britain’s main ports are London, Forth, Tees and Hartlepool, Grimsby and Immingham, Sullom Voe, Milford Haven, Southampton, Liverpool, Felixstowe, Medway, and Dover. The ports were nationalized in the late 1940s. The majority, however, have been returned to the private sector since the early 1980s. Those still publicly owned are run as independent companies by trusts, with the potential under 1991 legislation of moving fully to the private sector. Portsmouth and the oil ports in the Shetland and Orkney Islands are owned by the respective local authorities. In 2007 the United Kingdom’s merchant navy consisted of 1,637 vessels.

In the 15th century the English government began improving navigation on the country’s rivers, and the first canals were constructed, often by merchants keen to attract trade to their particular town. The majority of Britain’s canals, however, were built between about 1750 and 1840 by armies of labourers known as navigators because they built ways for inland navigation. Navigator was later shortened to “navvy”. Many navvies shifted to work on the railways, which from the 1830s began to compete with the canals and quickly superseded them as the main means of carrying freight.

Today, Britain has some 3,200 km (2,000 mi) of canals and navigable rivers, about half of the length available in the mid-19th century. Most inland waterways are used for recreation, but some are still significant carriers of commercial traffic. They include the Manchester Ship Canal, the largest canal in Britain, and the Caledonian Canal, which links lochs to provide a navigable waterway across northern Scotland.

N.

Railways

The world’s first public, steam-powered railway, the Stockton and Darlington Railway, opened in 1825. There followed 25 years of “railway mania”, in which more than 9,600 km (5,965 mi) of track were laid down. The expansion continued at a less frenetic pace into the early 20th century. During the first 100 years of the railway, the myriad small companies gradually merged, amalgamated, or were taken over to form a few larger ones. By 1923 there were just four large groups left in Great Britain: the London, Midland, and Scottish Railway; the London and North Eastern Railway; the Great Western Railway; and the Southern Railway.

In 1948 these four companies, together with their associated lines, docks, hotels, and canals, were nationalized by the government and taken under the administration of the British Transport Commission. The commission was replaced in 1963 by the British Railways Board (BR).

In 1955 a modernization programme was started, beginning with the steady replacement of steam trains by diesel and electric trains; the last steam locomotive was withdrawn by BR in 1968. Another aspect was the closure of many of Britain’s branch railway lines during the 1960s, as part of efforts to cut costs and rationalize services in the face of growing competition from road transport. The plan, devised and approved by Richard (later Lord) Beeching during his chairmanship of BR (1963-1965), became popularly known as the “Beeching Axe”.

Until 1994, BR was divided into six administrative regions: London Midland, Western, Southern, Eastern, Anglia, and Scottish. In 1994, under the Railway Act 1993, it was restructured to allow for privatization from 1995. Track and train operations were separated. Railtrack, a government-owned company, was set up to operate all track and rail infrastructure. Freight operations were divided into three geographically based companies that were privatized in 1995. Passenger operations, which were opened up to the private sector through franchises for particular passenger routes, were restructured into 25 separate operating units within BR. In 1995 franchises for the first passenger lines were awarded, with more following in 1996 and early 1997. In May 1996 Railtrack was privatized through a share issue. These moves to fully privatize BR were highly contentious and generated considerable criticism within Britain.

The fractured nature of rail organization was forcefully brought home in the late 1990s and early 2000s with a series of high-profile rail accidents—including those at Southall, London (1997; 7 deaths); Paddington, London (1999; 31 deaths); and Hatfield, Hertfordshire (2000; 4 deaths)—that were blamed in part on the separation of ownership of rail and rolling stock and the problem of the needs of privatized companies to provide shareholder income at the perceived expense of passenger safety. After the Hatfield crash, caused by faulty rails, the entire railway network was examined and track replaced, leading to severe delays to rail journeys for months. In October 2001 Railtrack went into official administration; it was succeeded by Network Rail, a not-for-profit company, in 2003.

In mid-2003, Network Rail was responsible for some 33,790 km (21,000 mi) of track and 2,500 stations. There was, in addition, some 408 km (254 mi) of track in London operated by London Underground Ltd. of which about 42 per cent is underground. The Underground system has been extended with the new extension of the Jubilee line. There are also urban rail systems in Glasgow, Liverpool, Tyne and Wear, Manchester, and Sheffield. In Northern Ireland, railway services are operated by the Northern Ireland Railway Company Ltd. Some 350 km (217 mi) of track were in use in the early 1990s.

In the late 19th century work was begun on a tunnel beneath the English Channel. The project was abandoned and then revived in 1957. Work began again, but Britain halted the project in 1973 citing the immense cost. In 1987, however, work began again and a service tunnel was completed in 1990. The main Channel Tunnel, which is 50.4 km (32 mi) long, runs from Folkestone, England, to Calais, France. It cost more than US$16 billion (£10 billion), runs at an average depth of 40 m (132 ft) below the sea bed, and was completed in 1993. It was officially opened on May 6, 1994, when Queen Elizabeth II and French president François Mitterrand travelled through the tunnel. Freight services began later the same month, but full passenger services were not established for almost another year.

O.

Air Travel

British Airways was formed in 1974 by combining the two state-run airlines, British Overseas Airways Company (BOAC) and British European Airways (BEA). Privatized in 1987, British Airways is one of the world’s leading airlines and operates the world’s largest network of international scheduled services, travelling to over 152 destinations in 74 countries. In 1976, together with Air France, British Airways inaugurated the world’s first supersonic passenger service, using the Concorde aircraft.

Besides the national airline, Britain has numerous independent operators. The largest include BMI, easyJet, Virgin Atlantic, Monarch Airlines, and Britannia Airways, which is the world’s largest charter airline. London’s main airports, Heathrow and Gatwick, are among the world’s busiest centres for international travel. Heathrow handles more than 67 million passengers a year, and is the world’s busiest airport for international travel. A fifth terminal is due to open in 2008. Gatwick handles over 32 million passengers and is the busiest single runway airport in the world. Stansted, London’s third airport, carries 22 million passengers a year. There are another 143 licensed civil aerodromes in Britain, of which 19 handle more than 1 million passengers a year each.

In 1970 Britain joined Airbus Industries, a European aircraft-manufacturing consortium, as an associate partner. In 1979 the country became a full member. Airbus manufactures medium and large wide-bodied passenger jets, with each member of the consortium making specific parts. Members include France, Germany, Belgium, the Netherlands, and Spain. Airbus became a single integrated company in 2001.

P.

Roads

Britain has some 387,674 km (240,889 mi) of public roads (2004), including 3,302 km (2,052 mi) of trunk motorways. England accounts for more than 71 per cent of the total road network, and over 82 per cent of the motorway network. Scotland has 13 per cent and almost 10 per cent respectively, Wales almost 9 per cent and 4 per cent, and Northern Ireland about 6 per cent and 3 per cent respectively. Although motorways account for about 1 per cent of the British road system, they also account for about 15 per cent of all road traffic. Trunk roads account for around another 4 per cent of the road network; combined with motorways they carry over half of all goods vehicle traffic.

About 90 per cent of all passenger travel in Britain is by road, and mainly by private car rather than public transport. In 2004 there were approximately 510 motor vehicles per 1,000 people in the United Kingdom. In 2002 more than 25 million passenger cars were registered in Britain, representing around 80 per cent of all vehicles on British roads. This inexorable growth in passenger cars has been paralleled by rising public concern about the environmental effects of increasing road traffic, and especially concern about pollution. In 1994 the government slowed down its road-building programme. The move was in part a response to research findings that tended to confirm environmentalists’ claims that the main effect of building new trunk roads and motorways had been to encourage extra traffic and not, as intended, to improve the flow of existing traffic. However, that trend is once more being reversed. Additionally, the Transport Act 2000 gave local authorities the power to levy road user charges in an attempt to reduce congestion. The Central London Congestion Charge Scheme, introduced under the Greater London Authority Act 1999, began in February 2003.

Q.

The Post Office

The Post Office, founded in 1635, pioneered postal services and was the first (1830s) to issue adhesive stamps as proof of advance payment for mail. In 1969 the Post Office was reorganized as a public corporation. Today, its operations are divided into three major brands: Royal Mail, the letters business; Post Office, the retail business; and Parcelforce Worldwide, the parcels business. The Royal Mail handles collection and delivery of mail, dealing with 84 million items a day; Parcelforce handles parcel delivery; while the Post Office is the retailing arm. It acts as an agent for the letters and parcels business, for government departments and local authorities and for the Alliance and Leicester Giro (formerly Girobank) bank. The Post Office operates 500 main post offices; another 14,000 or so branch, or sub-post, offices are operated as franchises or on an agency basis.

In the 1980s, the Conservative government suspended the Royal Mail’s monopoly on letter deliveries, subject to a minimum fee of £1, leading to a proliferation of courier services. However, the Conservative government attempts to bring the Post Office into the private sector in 1995 failed, following a parliamentary revolt by some of its own supporters.

In February 2005 the postal services commission Postcomm announced that the British postal service market would be fully liberalized from January 1, 2006, thus ending the Royal Mail Group’s monopoly. Other licensed operators can collect mail from businesses and from their own collection boxes, and transport and deliver mail to business and residential customers. The Royal Mail is still required to provide a universal collection and delivery service, delivering mail at a uniform price to all UK addresses.

R.

Telecommunications

In 1870 the government acquired the British telegraph systems, and in 1892 it began buying the private telephone companies. Telecommunications were the responsibility of the Post Office until 1981, when British Telecom was founded to take over telecommunications management. British Telecom was privatized in 1984, and in 1991 changed its name to BT. BT agreed to a merger with the US telecommunications company MCI in 1997 to form Concert, one of the biggest companies of its kind in the world. A number of other companies offer telecommunications services, including Cable and Wireless Communications, NTL, and Vodafone. The National Grid, the privatized electricity transmission company, has used its pylon network to set up a fibre-optics telecommunications system (Energis), and cable television companies also offer telephone services. Hull has always had its own telephone system. In the mid-1990s some 28 million residential and 6 million business lines were in operation, as well as more than 300,000 public and private payphones, giving Britain one of the world’s largest and most technologically advanced telecommunications systems.

S.

Television and Radio

The BBC, the Independent Television Commission (ITC), and the Radio Authority, all public bodies, are licensed to provide television and radio broadcasting services. Altogether Britain has 5 terrestrial television channels and almost 200 radio stations. There are numerous satellite companies based in Britain, and an increasing number of cable companies.

Founded in 1922 and working under a royal charter, the BBC operates 8 domestic television channels (including those dedicated to news and children’s programming) as well as 11 national radio networks and some 40 local radio stations. It is financed predominantly by revenue from a television licence fee and supplemented by trading activities. The World Service, initiated in 1932 as the Empire Service, provides radio news broadcasts in more than 33 languages to an audience estimated at more than 151 million, and is funded by the government. In 1991 the BBC set up World Service Television as a commercial subsidiary to operate its television satellite services.

The BBC’s royal charter is renewed periodically, normally following discussions between the corporation and the government over financing and other issues. The current charter was renewed in 2006. The 1994 White Paper included the recommendation that licence fees remain the prime source of BBC finance until at least 2001, with the possibility of whole or partial privatization thereafter to be examined in the interim.

The first regular independent television (ITV) programmes began in London in 1955 under the aegis of the Independent Television Authority (ITA). In 1972, when the first independent radio stations were licensed, the ITA was replaced by the Independent Broadcasting Authority (IBA), which oversaw the operation of both television and radio. Today, the third (ITV), fourth (Channel 4), and fifth (Channel 5) domestic television channels are operated by independent television companies: ITV is operated by regionally based television companies and one breakfast-television company; Channel 4, which began operating in 1982, has a remit to provide programmes for minority audiences of various kinds. In Wales the fourth channel is operated by a Welsh-language company, S4C. The government provides the majority of the funding for S4C, but Channel 4 raises its revenue through advertising and other commercial activities, as do the ITV companies. Channel 5 was launched in 1997.

There are about 250 commercially financed independent local radio stations in Britain, with many more planned. During the 1990s the first three national independent radio stations were launched: Classic FM (1991), Virgin 1215 (1993, now merged with Capital Radio), and Talk Radio UK (1995). Many more exist locally, providing a huge variety of music, discussion, and phone-in entertainment.

The 1990 Broadcasting Act overhauled the regulation of independent television and radio in the light of changes such as the introduction of satellite and domestic cable television services. In 1991 the IBA was replaced by the Independent Television Commission (ITC) and the Radio Authority. At the same time the Cable Authority was made part of the two new bodies. The ITC is responsible for licensing and regulating the terrestrial channels; licences for the third channel (ITV) are awarded on the basis of competitive tender. It is also responsible for cable services, independent teletext companies, and satellite services broadcast from Britain. The Radio Authority carries similar responsibilities for independent radio.

In 2000 more than 39 million television licences were issued each year, and there were estimated to be more than 85 million radios. See also Cable Television; Satellite Television.

T.

The Press

In 1996 there were 109 daily and Sunday newspapers—including 10 national dailies and 9 national Sunday papers—and around 2,000 weekly newspapers published in Britain.

The national papers were once all centred on Fleet Street, in central London; the name “Fleet Street” became synonymous with the newspaper industry. All have now moved their editorial and printing facilities to other parts of London, or away from the capital altogether. Ownership of the national press is highly concentrated. Three groups—News International (owned by Rupert Murdoch), the Mirror Group, and United Newspapers—own the majority of titles between them.

The national press is often divided into three market-based categories: the “quality”, the “mid-market”, and the “popular” press. The qualities, also called “broadsheets” because of the size of the paper they are printed on, include the most respected, and some of the oldest, British newspapers such as The Times (founded 1785), The Guardian (formerly the Manchester Guardian, 1821), the Daily Telegraph (1855), the Financial Times (1888), The Independent (1986), and the Observer (1791), a Sunday paper. The mid-market and, especially, the popular papers—the Sun (1964), the Daily Mirror (1903), and the Daily Star (1978)—are referred to as “tabloids” and are printed on smaller sheets of paper. Characterized by sensationalist stories and large quantities of photographic material, the mass-market tabloids are very influential. A recent innovation has been the publication of both The Independent and The Times in a “tabloid-sized” format.

Britain has a large, long-established publishing industry, including many outstanding book publishers. More publications per capita are produced in Britain than anywhere else in the world: some 7,000 periodicals, mainly weeklies and monthlies, are published. Noted weeklies include the Economist, the New Scientist, New Statesman, The Spectator, and the Times Literary Supplement.