United Kingdom

Mackenzie Meckl

UNITED KINGDOM

Overall Score: 75.8


World Rank: 13

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Quick facts!

Population: 64.1 million / 252.3 million less than the US

GDP: $2.4 trillion / $14.4 trillion less than the US

GDP growth %: 1.8% growth / .1% less than the US

GDP per capita: $37,307 per capita / $15,794 per capita less than US

Unemployment: 7.5% / same as US

Inflation: 2.6% / 1.1% more than US

Foreign Direct Investment: $37.1 billion / $150.4 billion less than US

Legal System

Private property rights and contracts are very strong. These rights are strongly and efficiently upheld and enforced through the court system. Protection of intellectual property rights is strong as well. The UK's economy is based on a sturdy rule of law. Also, the United Kingdom is based on an open trading environment. Corruption is not very common in the United Kingdom, however there have been some cases that have caught the attention of people quite strongly.

Competitive Markets

United kingdom's three main sectors for economy include services, manufacturing and construction. In the past year, the GDP in these sectors soared and the economy rose due to competition in markets. Also lat year, the economy experienced a huge growth since the year 2007. In the United Kingdom, there is an independent non-ministerial department called the CMA (the Competitive & Markets Authority). This department works to keep the markets competitive and the consumers happy. As the picture to the right shows, the UK is the 9th most competitive economy.

Limits on Government Regulation

There are not many regulations when it comes to starting a business in the United Kingdom. When it comes to starting a business, it takes less than six procedures and less than a week to do so. Inflation has gone down rapidly and has increased prices quite a lot. A few of the regulatory acts that are in place are the Competition Act of 1998 and the Enterprise Act of 2002. One of the most recent acts is the Enterprise and Regulatory Reform Act of 2013. In this reform act the CMA combines the current competition protections of the Office of Fair Trading and of the Competition Commission.

An Efficient Capital Market

The United Kingdom has an Efficient-Market hypothesis that says they have a weak-form market efficiency. This means that all past prices of a stack are reflected in today's stock price. Weak-form also means that using technical analysis will not be able to help beat the market in the future. The government still holds a large amount of power or stakes in the banking sector in the United Kingdom. However, the government is attempting to sell some of its shares.

Monetary Stability

In the United Kingdom, the monetary policy includes using interest rates and other ways to influence consumer spending. In the UK their goal is to keep the inflation around 2% +/- 1. Currently the inflation is at 2.6%. The monetary policy is set by the Monetary Policy Committee of the Bank of England. If the committee suspects that inflation will increase they will increase interest rates and vice versa. They have also used Quantitative Easing to electronically buy assets like government bonds to increase money supply.

Low Tax Rates

In the United Kingdom, the highest individual income tax rate is 45% and the highest corporate tax rate is 21%. Along with income taxes, the UK places taxes such as value-added taxes and environment taxes. The UK has the ninth highest tax burden for people earning over 125,000 British pounds or $186,000 a year. It was found that after taxes, they keep about 60.8% of what they earned. The people earning over 950,000 pounds ($1,419,000) keep only half of what they make after taxes.

Free Trade

The average tariff rate in the United Kingdom is 1.0%. Although there are a few non-tariff barriers, the United Kingdom is mainly very open to outside trade. The UK treats outside traders just as they would traders from inside their own country. Between the US and the UK, trade is fairly easy because of the Transatlantic Trade and Investment Partnership. Also, a recent free trade agreement has been placed between the UK and South Korea so it is much easier to trade with them now.

Video Summary

The short video shown above, shows that the economy in the United Kingdom has rose quite a lot since the recession in the UK in 2008. It has grown about 3.2% over the past year and it is looking good for the next few years!

Fun facts!!

  • London has the credit for the first hot chocolate store ever opened
  • Almost 75% of the land in the UK is taken for farming
  • Polo, soccer and Rugby were introduced to the world by the UK
  • Big Ben refers to the bell and not the clock
  • The highest point is Ben Navis at 1,343 m and the lowest point is -4m at The Fens
  • No point in UK is more than 120 km (75 miles) from the sea

Pictures of the United Kingdom