Economy of The United Kingdom

The economy of the United Kingdom is the seventh-largest national economy in the world measured by nominal GDP and eighth-largest measured by purchasing power parity (PPP), and the third-largest in Europe measured by nominal GDP (after Germany and France) and second-largest measured by PPP (after Germany). The UK's GDP per capita is the 22nd highest in the world in nominal terms and the 22nd highest measured by PPP. The British economy comprises (in descending order of size) the economies of the countries of England, Scotland, Wales and Northern Ireland.

In the 18th century the UK was the first country in the world to industrialise, and during the 19th century possessed a dominant role in the global economy. From the late-19th century the Second Industrial Revolution in the United States and Germany presented an increasing economic challenge to Britain. Despite victory, the costs of fighting both the First World War and Second World War further weakened the UK's relative economic position, and by 1945 it had been superseded by the United States as the world's dominant economic power. However, it still maintains a significant role in the world economy.

The UK has one of the world's most globalised economies. London is the world's largest financial centre alongside New York and has the largest city GDP in Europe. As of December 2010 the UK had the third-largest stock of both inward and outward foreign direct investment (in each case after the United States and France). The aerospace industry of the UK is the second- or third-largest national aerospace industry, depending upon the method of measurement. The pharmaceutical industry plays an important role in the UK economy and the country has the third-highest share of global pharmaceutical R&D expenditures (after the United States and Japan). The British economy is boosted by North Sea oil and gas reserves, valued at an estimated £250 billion in 2007.

Government involvement in the British economy is exercised by HM Treasury, headed by the Chancellor of the Exchequer. The Bank of England is the UK's central bank and its Monetary Policy Committee is responsible for setting interest rates. The currency of the UK is the pound sterling, which is also the world's third-largest reserve currency after the U.S. dollar and the euro. The UK is a member of the Commonwealth of Nations, the European Union, the G7, the G8, the G20, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Bank, the World Trade Organisation and the United Nations. The UK is currently ranked seventh in the world in the World Bank's Ease of Doing Business Index.

The UK economy has been weak in recent years following the late 2000s recession with growth largely flat since 2010. The UK experienced a double dip recession which was the longest and deepest in 50 years between Q4 2011 and Q2 2012; however recent figures have shown the UK economy improving, unemployment fell to 7.8% in the 3 months to September, this is the lowest for 1 year, and the UK economy started to grow again in Q3 2012, growing by 1.0% - the fastest rate of GDP growth since Q3 2007.