By Gross Domestic Product (GDP), the United Kingdom Economy is ranked 5th biggest in the world, according to data from the IMF and the World Bank.
But what makes the British Pound country so productive?
How open is it to international trade?
And is debt about to swallow it whole?
Let’s get some answers.
U.K.’s Gross Domestic Product is 2.6 trillion USD. While France’s is 2.4 trillion USD.
As mentioned above, Germany (3.46 trillion) and Japan (4.93 trillion) are the next up in the list, but they are much bigger in size.
After Japan? Things take off big time, with China up next (11.2 trillion) and then the United States (18.5 trillion).
What about GDP per capita?
According to the CIA World Factbook, U.K.’s GDP per capita was estimated at $42,500 (2016).
This places the United Kingdom in the 38th position. Once again, just ahead of France (39th), but behind Germany (30th) and the United States (20th).
In this case, Japan is worse off at the 44th place.
the United Kingdom is ahead of the European Union (43rd).
Good news for Britons? Who knows.
World Bank statistics place the U.K. population at 65.5 million people. Once again, pretty close to its sister country (don’t kill me!) France (66.9 million).
Thus, even though France’s population is slightly higher, U.K.’s GDP is bigger. And it’s big enough to make GDP per capita higher in the U.K.
Are there any particularly strong industries in the United Kingdom?
U.K. is mainly a service hub (like most developed countries these days).
It is also very well-diversified when it comes to its economy.
Some of the major activities of the United Kingdom economy are:
Financial services, healthcare, construction, manufacturing, wholesale retail, transportation, and government, among others.
International Trade and the U.K.
Statistics from the World Bank suggest U.K.s degree of openness (by total trade) is 58% of GDP (2016).
This makes the U.K. a very open economy like Canada (60%) and in contrast to the United States (30%).
Note: USA is an open economy, it’s just that most of its GDP comes from domestic consumption (big!), investment, and government expenditure.
What about the trade balance, it’s a deficit, right?
Exports of goods and services were about 27.63% of GDP.
While imports of goods and services rose to 29.22% of GDP.
Both according to trading economics.
So, to answer your question, yes. The United Kingdom economy
(like most) functions on a trade deficit.
Note2: Wait. If some countries have trade deficits, other countries must have surpluses… how can most countries carry a deficit? A few can carry a huge surplus to offset smaller debts from many countries.
Great. Let’s jump into debt.
In terms of private debt to GDP, U.K.’s is about 87.6%.
This puts the United Kingdom economy at a more indebted position than the United States (79.5%) and the Eurozone (58.6%).
When it comes to government debt, we have U.K. at 89.3%. which is above the Eurozone’s 89.2%, but below USA’s 106.1%.
Thus, we can place the United Kingdom’s debt profile (both private and public) among the highest in the world, but not in nosebleed territory.
And with that, I close this short, little tour of the United Kingdom economy.
Some may want me to put more emphasis on the economic activities, but when it comes to these big, developed economies (the one’s we focus on), they tend to blend in, with few clearly distinctive activities.
See you soon,
The Forex Economist
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