ROMSO Cyprus Knowledge Base

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The UK is one of the most deregulated economies in the world. The British economy is the origin of so-called “Anglo-Saxon capitalism”, which is based on the principles of liberalisation, the free market, low taxation and low regulation. The country has the world’s sixth largest gross domestic product (GDP) and the second largest in Europe after Germany (as of 2022). In purchasing power parity (PPP), it is in sixth place. At 28,300 euros, GDP per capita is in the upper European reference framework. Compared to EU GDP (expressed in purchasing power standards), the UK reaches an index of 104 (EU-28 in 2019: 100). In terms of inflation, interest rates and unemployment, the UK economy is one of the strongest in Europe.

The country was a member of the European Union for 47 years and is a member of the Group of Seven. The British economy is often referred to as “Anglo-Saxon capitalism”. Since the 1980s, numerous state-owned enterprises have been privatised in the course of Thatcherism and the trade unions have been weakened. The 1997 Labour government introduced, among other things, the minimum wage and supported the domestic economy with increased state investment, but pursued a similar policy overall.

Today, industry plays only a relatively minor role in the British economy, even in European comparisons (except in the export share) and many traditional brands such as Bentley, Jaguar or Landrover are no longer British companies. Financial services have gained in importance. The capital London is an international financial centre ("City of London"), the location of some important stock exchanges and banks. After a period of high growth starting in the late 1990s, the British economy was in recession from 2008 to 2010 (see Financial Crisis as of 2007). The UK economic performance has been severely affected by the COVID-19 pandemic and the consequences of Brexit and has not reached the level of late 2019 in the third quarter of 2022. After a strong growth year 2022, the International Monetary Fund forecasts the third weakest real growth of the G7 countries, the OECD sees the United Kingdom as the bottom. From a German perspective, the United Kingdom falls out of the ranking of the ten most important trading partners in 2022.

In the Global Competitiveness Index, which measures a country’s competitiveness, the UK ranked 9th out of 141 countries in 2019. In the index for economic freedom, the country occupies the 24th of 177 countries in 2022. Square, in front of the US and behind Cyprus.

Economic sectors

Agriculture and fisheries
British agriculture is intensive, highly mechanised, heavily subsidised and efficient by European standards. Agriculture contributes about 2% of GDP; about two thirds of production is produced by