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Causes of Economic Change in the UK

Industrial Structure

Industrial Structure is a term that refers to the percentage of employment in different sectors of industry within an economy. Those sectors are shown below:

The UK’s economy has changed over time, and so has its industrial structure. 

Look at the Clark-Fisher Model below, which shows how countries move between three stages, and how their industrial structure changes as they evolve.

The UK fits the Clark-Fisher-Model perfectly.

  • Pre-Industrial stage (1700) – Most people worked in the primary sector which mainly involved mining and farming.
  • Industrial stage (1750-1900) – Secondary manufacturing increased, creating consumer goods and machinery.
  • Post-Industrial stage (1900-current) – Service based tertiary sector and research based quaternary sectors increased, and manufacturing moved elsewhere.

Causes of Economic Change

There are three main causes of economic change in the UK. 

De-industrialisation

  • This is the broad decline in traditional manufacturing industries and growth in the tertiary and quaternary sectors.
  • Manufacturing shifted to Newly Emerging Economies (NEEs) due to cheaper labour costs, longer working hours and less influence of trade unions.
  • Mechanisation took full effect, with machines replacing many industrial jobs, reducing the sector’s influence on employment.

Government policies

  • Between 1945 and 1979, post-WW2 Britain experiences a boom in state run industries to boost the struggling economy.
  • In 1973, the UK joined the European Economic Community (EEC), which later became the European Union. This opened up new markets for British businesses, created diverse job opportunities for its workforce, and led to beneficial regulatory changes.
  • Closure of factories and coal pits in the 1980s. The UK government stated that the cost of mining in the UK couldn’t compete with cheaper, overseas mining.
  • In the 1980s the government took a step away from regulating the market, companies therefore had more freedom to find new ways to make profit.
  • 1980s Privatisation of state-owned businesses such as British Gas made a lot of money for the government in the short term. 
  • In 2016, the UK voted to leave the European Union, with the actual departure (Brexit) taking place in January 2020. The full effects of this haven’t been realised, but some companies have announced closures of factories in the UK. 

Globalisation

  • The world has become more interconnected with increased world trade, foreign investment and communication.
  • Service sector continues to grow and industry moves to other countries.
  • Global economies are more linked now. The 2008 financial crisis sunk Britain into a recession that it has struggled to move on from. Due to the crisis, the government forced changes on banks causing mortgages and loans to be more difficult to secure.
  • Government policy moves towards lower taxes and greater personal financial freedom. This change is linked to the broader global trend of economic liberalisation, which encourages open markets, free trade and less government intervention in the economy.

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