PESTEL ANALYSIS OF UK ECONOMY

PREFACE

The UK has been among one of the greatest nations of the world. It has been among the investors top priorities, as not only economy, but all other factors (Social, political and geographical) are favorable from an investors point of view or from an immigrants point of view. This report contains comprehensive analysis of UKs Social, Political and Geographical factors. Special emphasis is given on economy since it is the main sector of any country. All major economic indicators are analyzed from 10 years time perspective (2002-2012). Finally, the idea extracted and future of UK economy is predicted by analyzing the above factors.

Author Hasan Bin Tariq MBA (B&F) Dated: 11 Oct 2012

TABLE OF CONTENTS SERIAL NO

1 2

CONTENTS
History of UK Background of UK

PAGE NO
4-6 7-15

3 4 5 6 7 8

Currency Geography Demographics of UK Analysis of data Comments & Conclusion References and end note

16-17 18-19 20-25 26-51 52 53

UNITED KINGDOM
INTRODUCTION:
HISTORY: The United Kingdom of Great Britain came into being on 1 May 1707, as a result of the political union of the Kingdom of England (which included Wales) and the Kingdom of Scotland. The union was the result of the treaty passed on and signed by the parliaments of both the nations that was discussed the previous year. The Treaty of Union enabled the two kingdoms to be combined into a single kingdom with the two parliaments merging into a single parliament of Great Britain. The new kingdom formed got its first monarch in the name of Queen anne, since England and Scotland used system of monarchs when they were separate states and both states share the same monarch. Even after forming the single kingdom, certain aspects of the former independent kingdoms remained separate, in line with the terms in the Treaty of Union, these are: Scottish and English law remained separate Both nations continued to have divergent systems of education. The religious and cultural aspects and places remained separate of both the nations.

After the demise of the 1st monarch, the merged kingdom was ruled over by the followings. George Louis, became king as George I (171427), he was though unpopular among the kingdom but he built up army and stabilize political system in the new kingdom and restored peace in northern Europe. George II (17271760), is renowned as he built up the first British Empire, strengthening the colonies in the Caribbean and North America. He promoted and advocated for constitutional system in the kingdom. George III reigned 17601820, he was the last king to dominate the government. In his reign, the 1st british empire was lost as the consequence of American revolution, but he built a second empire based in India, Asia and Africa. He is renowned for the beginning of the industrial revolution that made Britain an economic powerhouse.

On 1800, an act of union was passed by British Parliament by which on 1st January 1801, the Great Britain and Ireland joined to form the United Kingdom of Great Britain and Ireland.

The Victorian era, named after Queen Victoria (18371901), saw the growth of a democratic system of government that had begun with the Reform Bill of 1832 that introduced wide-ranging changes to the electoral system of England and Wales. That era is well known in Britain history as the era of industrial advancements. Exciting new technologies such as steam ships, railroads, photography, and telegraphs appeared, making the world much faster-paced. This era also saw two great wars namely the Crimean War against Russia (18541856) and the Boer War (1899 1902), by which Britain extended its influence in other continents of the world namely Africa and Asia. 20th Century: With the start of the 20th century, UKs government was taken over by the son of queen Victoria, King Edward VII, marked as an Edwardian era. The era last for few years and social reforms of last century was continued in this century with the foundation of Labor party in 1900. Things like motion pictures, aero planes and automobiles were popularized in this era. The Edwardian era was succeeded by George V, who was a British monarch who established the modern pattern of conduct reflecting british royalty based on middle class values. After few years, Britain entered World War I when Germany invaded Belgium, afterwards UK was grappled with issues like Irish crisis, labor unrest, the women's suffrage movement. WWII: During WWI, the economy of UK though faced serious issues but nevertheless it grew by 14% but the Government was the main contributor to that growth since private sector was reluctant to take up stakes in struggling UK economy, the share of GDP roused from 8% in 1913 to 38% in 1918. Taxes rose sharply and Government spending were cut. This was followed by the great depression of 1930s in which unemployment reached historic high and growth felt very low. After few years of stability, Britain again felt into WWII in 1939, when the Germans invade Poland. After the end of WWII in 1945, Churchill who lead UK throughout resigned, labor party won the majority. Britain though won the war but lost India and the rest of Empire in 1947, it then joined UN in 1945, NATO in 1949 and EU in 1973. Conservatives again came back in 1951 with a comprehensive program of reconstruction and rebuilding of Britain after WWII. These efforts were characterised by a 40% rise in average real wages from 1950 to 1965, wages rose by 72% while prices rose by 45% to 1963 and consumer spending rose by 45%, making UK a Consumer market.

In 1973-74, UK again felt into a slight recession with the oil crisis and Stock market crash. This lead to Labor party take over upto 1979. In 1980, conservative again took over the government and followed a privatization program, taxes were cut and PSEs and markets were deregulated. Unemployment reached a record high and inflation rose very high uptil 1984-85, but then dramatically fell to less than half of 1984-85 level and inflation stabilized. 1990s: The start of 1990s saw a small recession due to global downturn, but that was short term and ended in mid 1990s. The rest of the decade saw smooth and consistent growth. Eighteen years of Conservative rule ended in May 1997 when Tony Blair and the Labor Party triumphed in the British elections. He produced constitutional reform that partially decentralized the UK, leading to the formation of separate parliaments in Wales and Scotland by 1999, to continue more than 15 years of good growth. In sep 2001, UK announced support to US against global terrorism and sent troops and supplies for the operation. Annual growth rates averaged 2.7% between 19922007, with finance sector growth contributed mostly in the regime. On 2008, UK felt into another recession which was due to US mortgage crisis, that is still in existence throughout the world. During this 4 year period, Production felt down by 10% and economy shrunk by 5% uptil Dec 2009. In May 2010, Conservative party again took over UK in general elections. In 2012, UK felt into a double dip recession, posing 3 consecutive negative quarters of growth.

BACKGROUND OF UK:
Economy:
Size

The UK economy is one of the largest economies of the world. It is ranked 9 th largest economy of the world with reference to GDP (PPP), which is 2.253 trillion $ and ranked 25th in GDP per capita (nominal) as per CIA world fact book, which amounts to 36,900 $. In Europe, UKs economy is third largest after Germany and France as compared to GDP (nominal). It has nominal GDP of 2.418 trillion $. Sectors

The UK has one of the world's most globalised economies. It is comprised of primay, secondary and tertiary sectors. The relative strength and contribution of each sector in aggregate economy is as: Agriculture: 0.7% Industry: 21.9% Services: 77.4% Agriculture: The UK is enriched with natural resources e.g Coal, oil, natural gas, tin, limestone, iron ore, salt, clay, chalk, gypsum, lead, silica. Moreover, UK is self sufficient in its food and agricultutal requirements. Agriculture of UK is spreaded over crops, live stock and poultry and fisheries with live stock the major sector of agriculture having 2/3rd share in production. UK agriculture is heavily mechanized with only 1.5% labor force producing 60% of food needs of entire country. Industry: UK is an heavily industrialized economy. It is the second largest sector of its economy with respect to GDP share. Some of the key industries of Uk are as under Machine tools, electric power equipment, automation equipment, railroad equipment, shipbuilding, aircraft, motor vehicles and parts, collectively known as engineering and allied industries; electronics and communications equipment, metals, chemicals, coal, petroleum, paper and paper products, food processing, textiles, clothing, other consumer goods

The manufacturing industry of UK is one of the largest in the entire world. In 2008, the UK was the sixth-largest manufacturer in the world measured by value of output. i UK manufacturing Sector is one of the highest gross value adder (140bn) in the GDP and is a large employment provider amounting to 8.2% of the labor force.ii The automotive industry of UK is 15th largest in the world and 4th largest in Europe, and accounts for 11% share in total exports.iii Its a 50 billion industry. Aerospace industry of UK is also 3rd largest in the world and has annual turnover of around 24 bn last year. The aerospace industry of UK has presence from almost 80 years and has contributed towards the development and upgradation of aircrafts of many types including Civil aircrafts, Military aircrafts, helicopters, engines, missiles, radars and satellites. iv Britain autospace industry contains domestic as well as overseas global players including BAE systems (the world's second-largest defence contractor) and Rolls-Royce (the world's second-largest aircraft engine maker) and Boeing and General Electric, respectively. This industry contains labor force of 100,658 and exports were close to 18 bn in 2009v. Pharmaceutical industry is also one of the largest industries of UK. This industry of UK contains global leading market players like GlaxoSmithKline and AstraZeneca. UK invests highest amount in terms of R&D in this industry amounting to more than 36%. This sector has a turnover of 31.8 bn and employs around 78000 people vi and it had exports of 14.6 bn in 2007.vii Other industries include food processing, paper, printing, publishing, rubber, metals and textiles. These collectively made gross value addition of around 63 bn in 2009.

Services: Services being the largest sector of economy with London being the world's largest financial centre alongside New York and has the largest city GDP in Europe. The services sector contains the following industries Financial and insurance, Real estate, Scientific and technical, Public administration and defence, info and communication, hotel and restaurants and arts and entertainment. viii The government health and education is the largest sector with gross value addition of 253 bn . In the UK the majority of the heath care sector consists of the state funded and operated by National Health Service (NHS), which accounts for over 80% of all healthcare spending in the UK and has a workforce of around 1.7 million, making it the largest employer in Europe, and putting it amongst the largest employers in the worldix. This head contains Public admin, social security and health and educational facilities provided to general public. This sector is the largest employment provider with 27.25% jobs. Whole sale, retail and repair of motor vehicles is the 2nd largest sector with the gross value addition of 137.68 bn x. This sector is 2nd largest employment provider with 26.06% jobs. The UK grocery market is dominated by five companies Asda (owned by Wal-Mart Stores), The Co-operative Food, Morrisons, Sainsbury's and Tesco which together have a market share of over 80%xi. UK wholesale market is divided into 3 types Cash and carry wholesalers: Supply a wide range of food and grocery categories mainly through self service depots. Primary customers are independent retailers and caterers but also have secondary ones. Delivered grocery wholesalers: supply product solely by delivery service, to customers in the retail sector. These are primarily independent and convenience retailers. Delivered foodservice wholesalers: These provide a wide range of businesses in the eating out market including cafes, restaurants, fast food establishments and schools and hospitals. Also include specialized category whole sellers. London is the major retail center of the world, UK-based Tesco is the third-largest retailer in the world measured by revenues (after Wal-Mart Stores and Carrefour) and is the current leader in the UK market with around a 30% share. Financial and Insurance is the 3rd largest sector of UK economy with gross value addition of 125.4 bn in 2011. Measures of the financial sector usually include the activities of wide range
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of firms, at the retail and wholesale level, including retail banks, building societies, investment banks and hedge funds, and are wider than the activities of financial services firms located in the City. They also include activities related to insurance and pension funds. London is the largest financial center of the world. London accounted for 45.8% of the total financial and insurance sector GVA in the UK in 2009. UK is ranked 4 th by OECD among European countries in the provision of GVA accounted for by financial and insurance sector. There are over 500 banks with offices in Londonxii. The City also contains the London Stock Exchange, the London International Financial Futures and Options Exchange, the London Metal Exchange, Lloyds of London, and the Bank of England. The sector contains 1.1 million workforce in the UK, 3.6% of all workforce jobs. It has combined trade surplus of more than 3% in 2011.xiii The other major sector includes real estate (90.4 bn GVA), and 1.4% of total workforce jobs, and info and communication (77.1 bn GVA) and 3.6% workforce jobs.

POLITICAL:
UK has been divided into 3 parts i.e Scotland, Wales and Northern Ireland, all these three have a special status and have their local administrations with wide range of responsibilities. xiv However, England has been the main player of UK containing population of 84% of total UK. The UK political system has three arms of state, namely: 1. The executive 2. The legislative 3. The judiciary 1. The executive The ministers who run the government and propose new laws and made amendments to the old and existing are called the executives. The British political system is based on the principles of constitutional monarchy in which the monarch (the queen) is the head of the state and Prime minister is the head of government (which is appointed by the queen). There is no president in UK. Under British politics, Monarch had the final authority but the exercise of that authority is subject to the advice of prime minister and his cabinet. Prime minister and his ministers run the government on behalf of the queen and they have the executive rights in many areas called royal prerogative. The monarch is determined on the hereditary and primogeniture principles which means that the oldest male child of a monarch is the next in line to the throne.xv
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2. The legislative: The Parliament is the supreme legislative body and the government is dependent upon the parliament for law making and amendments. UK political structure is a multi party system with three prevalent parties 1) the Conservative party 2) the labor party and 3) and the liberal party.xvi Though, since 1920s, the liberals have been the underdog and governments are formed by 1 and 2. The General elections are held every 5 years and the party who gets highest votes from public acquires the majority seats in the parliament and thereby the leader of the political party with an absolute majority of seats in the House of Commons is chosen to be the Prime Minister (FPPT system). The Prime Minister then selects the other Ministers which make up the Government and act as political heads of the various Government Departments. E.g finance, education, healthcare etc. The parliament of UK is divided into 2 houses of chambers i.e 1) house of commons and 2) house of lords. House of Chamber is the lower chamber but it serves the main parliamentary functions as most ministers are part of this house and are drawn from this house. There are 650 constituencies (members elected from different areas of country). House of lords is a upper chamber but it has less authorities than house of commons. Its main roles are to revise legislation and keep a check on Government by scrutinizing its activities. It can delay the legislations from commons (bills) by exercising veto but Parliament Acts 1911 and 1949, has limited its powers so that it cant block the bills more than one session, so ultimately it cannot block the will of the House of Commons. The house of lords consist of 2 groups 1) lord temporals and 2) lord spirituals. Temporals are appointed members by queen, 92 members have the hereditary rights (they can pass their seats onto their descendents), and Spiritual includes religious figures who form church of England, they are 26 in numbers, i.e 5 archbishops and 21 bishops. Usually a single party make and run the government but in 2010, David Cameron formed coalition government with liberals. UK though is a sovereign parliament but Scotland has its separate parliament and north ireland and wales has their separate assemblies. 3. The Judiciary: Like the legislative system, UK judiciary system also operates on three separate bases, i.e one for England and Wales, one for Scotland, and one for Northern Ireland. In UK, ministry of justice administers the court system. After Constitutional Reform Act 2005, Supreme court is appointed as the highest court in land Judiciary is independent from governement. It consists of 12 judges. The Courts of England and Wales are headed by the Senior Courts of England and
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Wales, consisting of the Court of Appeal, the High Court of Justice (for civil cases) and the Crown Court (for criminal cases). The judicial committee of the privy council is the highest court of appeal (or court of last resort) in UK. It comprises of the same members as of Supreme court. Appeals are made to the monarch, who then referred it to Judicial committee for advice and its advice is accepted by the monarch.xvii xviii Local government system is followed in UK. England has a mix of 2 tier and single tier systems. Powers are shared between London borough council and Greater london authority headed by an elected mayor. Since 1973, UK is part of EU, and overtime it has acquired memberships of various global and regional bodies xix

SOCIAL:
UK is well known for its disciplined, organized and Strong civil society. Some of the most famous characterisitcs of UK civil society are:xx Human Rights Bill: UK is the signatory of European convention on the human rights, by which rights of every human are respected and are a part of domestic law and exercised in courts. A free media and freedom of information: The Freedom of information act, obliges national governmnet, local governments and public bodies to provide any kind of information requested by any citizen. Trade Unions: A quarter of workers in Britain are members of trade unions representing different occupational groups or industries. These trade unions are totally independent of government and employers. Pressure groups: UK have many organizations e.g National Autistic society, Green peace, etc that campaign publically on various political, environmental and societal issues and force government to take right decisions based on public welfare. Charities and voluntary groups: UK citizen are very active in making donations and supporting public welfare activities. Charities and voluntary groups are spread over 28 categories in UK including education, health, housing,etc.xxi Social Classes: The social strucutre of UK is influenced by the social class system. The Parliament of United Kingdom is orgaanized on class basis with House of lords representing Upper and elite class and House of commons representing every one else. Monarch is at the top of the Social class structure.xxii
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NRS (National readership Survey) estimates of UK population by social grade on dec 2005 are.

social grade A B C1 C2 D E

social status upper middle class middle class lower middle class skilled working class working class those at lowest level of subsistence

occupation higher managerial, administrative or professional intermediate managerial, administrative or professional supervisory or clerical, junior managerial, administrative or professional skilled manual workers semi and unskilled manual workers state pensioners or widows (no other earner), casual or lowest grade workers

The weightage of each class is given below based on NRS estimates of UK population by gradesxxiii All UK Adults (15+) Totals Estimated 48,186 000s % profile 100 Social Grade A Upper Middle Class Higher managerial, administrative or professional Estimated 1,932 000s % profile 4.0 Middle Class Intermediate managerial, administrative or professional

Men

Women

23,378 100

24,808 100

1,032

900

4.4

3.6

Social Grade B

Estimated 10,573 000s

5,404

5,169

% profile 21.9 Social Grade Lower Middle Class Estimated 13,982

23.1 6,400

20.8 7,581
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C1

Supervisory or clerical and junior managerial, administrative or professional

000s

% profile 29.0 Social Grade C2 Skilled Working Class - Skilled manual workers Estimated 9,964 000s % profile 20.7 Social Grade D Working Class - Semi and unskilled manual workers Estimated 7,819 000s % profile 16.2 Those at the lowest levels of subsistence Entirely dependent on state for long-term income

27.4 5,395 23.1 3,712 15.9

30.6 4,570 18.4 4,107 16.6

Social Grade E

Estimated 3,916 000s

1,435

2,481

% profile 8.1

6.1

10.0

As it is clearly mentioned above, the C1 class comprising of Junior managerial, clerical workers that includes white-collar workers e.g railway guards, airline stewardesses and ticket agents, travel agents, clerks of hotel and factories is the largest social class in UK with 29% weightage. Class B is the 2nd largest social class with 21.9% share and consists of people who get tertiary eduaction and are in occupation of accountants, architects, teachers, social workers, managers, specialist IT workers, business people, engineers, or civil servants. Class C2 is the 3rd largest class with 20.7% weightage. They are in blue collar occupations like self employed contractors and technicians, these are usually college graduates and dont have university eduaction. They are specialized in manual works. The annual earnings of these classes are shown below (based on NRS estimates for 2004) A - 50k and over B - 35-50k C1 - 25-35k C2 - 15-25k D - 7-15k E - 5-7k
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Literacy rate: UK has one of the highest literacy rates in the world with 99% literate people. xxiv Population below povertyline: In UK, the population living below poverty line is 17.1% in 2010.xxv Labor force and unemployment: UK has labor force one of the largest labor force in the world amounting to 31.7 million. However around 8% of the labor force is unemployed.

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CURRENCY
Overview: Pound sterling is the official currency of UK. It is denoted by and its ISO code is GBP. Origin: There are divergent thoughts concerning the origin of GBP. One most considerable reference is that of anglo saxon times (when german tribes invaded and setlled in Britain) around 550 and 1066, when coins called sterlings were minted from silver, 240 of these sterlings weighed one pound, and large payments came to be made in pounds of sterlings. Another reference is of Old Oxford english dictionary which defines sterling as the silver penny used by english Normans and dates back to 1300. The Bank of England was formed in 1694, followed by the Bank of Scotland a year later. Both began to issue paper money. Denominations: The Pound is made up of pence. One pound is made up of 100 pence.xxvi UK currency is issued in both coins and notes. The most common denominations of Pound are as follows. Coins: Notes: 5 (blue) 10 (brown) 20 (purple) 50 (red) 1p and 2p ('copper') 5p, 10p, 20p and 50p ('silver') 1 ('gold') 2 ('silver middle-gold edge')

Trading Volume: As per the forex trading volume, GBP is the 3rd largest currency with the 13% share of the daily trading volume. It is use as a currency pair with many currencies including USD, JPY,CAD, AUD and EUR. Bank for International Settlements(BIS) survey shows that the GBP/USD with 14% of
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total daily volume is the third most traded major currency pair. It is a highly volatile pair and moves around 150-200 pips in a day. xxvii

Gold Standard: The coins were first issued as silver coins which were replaced by the silver tokens due to shortage of silver and then in 1817 to gold coins. After 1833, Bank of England has the sole authority and responsibility for the issuance of currency and its notes became legal tender and in 1844, they were required to be back by gold, hence gold standard was officially adopted as a standard for UK currency. Exchange rate determination: In 1940, GBP was pegged with USD and that system continued until 1944 Bretton Woods Agreement, the international monetary system based on convertibility of the various national currencies into a U.S. dollar that was in turn convertible into gold. In 1971, the Bretton woods agreement broke down and GBP floated on the foreign exchange market basis. From now, it is traded on open market basis. In 1997, Bank of England was given the responsibility for setting the base rate of interest and money supply management. Usage: Sterling is applicable in much of the British empire. However, it also circulates outside Britain in regions like Australia, Barbados, Irish Free State, Jamaica, New Zealand, South Africa and etc. Since 2002, Euro is also in use in major parts of European countries including Britain but the magnitude is low in Britain as majority of British people are against the adaptation of Euro as official currency of UK.xxviii Reserve Currency: As per IMF currency composition of official exchange reserves, GBP is the 3rd largest currency which is held by most central banks as part of their official exchange reserves, after USD and EUR.xxix

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GEOGRAPHY:
Overview: The UK consists of group of islands (called British isles) of the northwest coast of Europe. UK is comprised of 2 sovereign states, i.e 1) Great Britain (formed by collision of England, Scotland and Wales) and 2) Northern Island (republic of ireland). Area: The area of UK is 243610 km2. England is the largest component of UK with 53.5% total share of area, Scotland with 2nd (32.3% share), Wales 3rd (8.52% share) and Northern Ireland 4th and last with 5.67% share.xxx Location: The UK lies between the North Atlantic and the North Sea, and comes within 35 km of the northwest coast of France, from which it is separated by the English Channel (an arm of the Atlantic Ocean that separates southern England from northern France, and joins the North Sea to the Atlantic). xxxi UK shares an international land boundary with Republic of Ireland. Structure: Much of the North and west side of UK is comprised of sharp edged mountains, covered in high grounds, separated by deep valleys. However, the countries own a different set of geographies. The north of England is comprised of low land terrain. The south is comprised of low hills. The geography of Scotland is highly varied, from rural lowlands to barren uplands, and from large cities to uninhabited islands with the Highlands to the north and west and the lowlands to the south and east sides. Highlands contain mountains whereas lowlands are flatter and most population resides there. Wales is situated on the western side of central southern Great Britain, between the Irish Sea to the north and the Bristol Channel to the south. Wales is a mountainous landscape in 3 regions Snowdonia in the north west, the Cambrian Mountains in mid Wales, and the Brecon Beacons in the south. xxxii Northern Ireland is located west of the island of Great Britain. Ireland consists of a mostly flat low-lying area in the midlands encircled by high mountain ranges. South part is also comprised of mountains, while north contains mostly islands. Ireland starts and ends with the island at its extreme south and north points. In northwestern England and in Scotland highlands are numerous rivers and lakes called lochs.
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As per US Dept of State, UK has following Terrain: 30% arable, 50% meadow and pasture, 12% waste or urban, 7% forested, 1% inland water. Climate: The climate of the UK is generally temperate, subject to local temporal variations. Generally, general the south of the country is warmer than the north, and the west wetter than the east. Natural resources: As per US Dept of State, UK has following Land use: 25% arable, 46% meadows and pastures, 10% forests and woodland, 19% otherxxxiii. Among the natural resources are, coal, petroleum, natural gas, iron ore, lead, zinc, gold, tin, limestone, salt, clay, chalk, gypsum, potash, silica sand, slate, arable land. UK has large coal, oil and gas reserves. Administrative divisions: Administrative divisions are different of each country with in UK. England has upper division and lower, Upper consists of 9 government of EU office regions, lower consists of country and district councils and local authorities. Local government in Scotland is divided on a basis of 32 council areas, with wide variation in both size and population with some cities having status of separate council areas. Local government in Wales consists of 22 unitary authorities. Local government in Wales consists of 22 unitary authorities organized into 26 district councils.xxxiv

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DEMOGRAPHICS OF UK POPULATION: Overview: The population of UK as per mid july 2011 survey, is about 63 million. As per population, UK is 3rd largest country in the EU and 22nd largest in the world. xxxv The population of UK is divided among many country nationals covering all the continents of world. The population of UK census is measured and published every 10 years by ONS.xxxvi Population by region: The population of UK is divides as follows (as per descending order):xxxvii England 83.8% Scotland 8.4% Wales 4.9% Northern Ireland 2.9%

(fig 1) As it is clear from above that South east is the highest populated region of UK with 13.7% of entire population followed by London region of UK with over 8 million population (12.7% population) and North west (11.2%). Density: Its overall population density is one of the highest in the world at 660 people per square mile and 256 per km2, and is the 52nd largest country as per population density. 80% population lives in urban areas. xxxviii

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Growth rate: UK population growth rate is 0.553% as per 2011. xxxix Population structure (Ages and rates): The ages of population and the ratio of males and females are as under Age group Population Male 014 1564 65+ 5,560,489 Female 5,293,871 18.0 66.3 15.7 xl %

20,193,876 19,736,516 4,027,721 5,458,235

Birth, death and fertility rates: Birth rates are 12.27 births/1,000 population, Death rates are 9.33 deaths/1,000 population, and fertility rates (birth per women) are 1.91 children born/woman.xli ETHNIC GROUPS: The ethnic groups in UK are as under white (of which English 83.6%, Scottish 8.6%, Welsh 4.9%, Northern Irish 2.9%) 92.1%, black 2%, Indian 1.8%, Pakistani 1.3%, mixed 1.2%, other 1.6%. xlii The population of Chinese is growing at the highest pace with average annual growth of 8.6%, followed by mixed white and black Africans of 6.3% and then black Africans by 6.2%. xliii The residency of major ethnic population in major areas of UK is given below.
Place 1 ENGLAND AND WALES 2 ENGLAND 3 SCOTLAND 4 NORTHERN IRELAND
% White, British % Mixed % Asian or Asian British % Black or Black British % Chinese

83.35 82.79 98 99.1 %

1.80 1.85 0.25 0.20

5.87 6.11 1.09 0.15

2.81 2.94 0.16 0.07

0.82 0.85 xliv 0.32 0.25

A more detail classification of UK ethnic population is shown below in (table 2). Labor force:
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The following figure illustrates the labor force diversification with respect to the ethnic groups in UK. White british are the largest segment, then white british (English) and then white british (other).

(Fig 2)

RELIGION: UK is the place famous for its religious history and background. The following are the major religious groups in the UK.xlv

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RELIGION
Christian No religion 43.54% 40.57% Muslim Hindu Sikh Jewish 8.78% 4.14% 0.17% 0.15% 0.26% 0.32% 0.54% 1.53% Buddhist Other religion

(fig 3) Religion Christian No religion Muslim Hindu Sikh Jewish Buddhist Other religion Not stated Total religious (table 1) Number 42,079,000 9,104,000 1,591,000 559,000 336,000 267,000 152,000 179,000 4,289,000 45,163,000 % 71.6% 15.5% 2.7% 1.0% 0.6% 0.5% 0.3% 0.3% 7.3% 76.8%

As it is evident from the above table, that Christians are the largest religious group in UK, and for 1400 years, it has been dominated by various forms of Christianity e.g roman catholics, protestants, etc. The 2nd largest group is of non religious e.g atheists, agnostics,etc. Muslims are the 3rd largest group in UK with 2.7% weightage. Other includes Hinduism, jews, sikh, etc. HISTORICAL PLACES: UK is the place which contains most historical places of may religions including Church of England (mother of churches worldwide), Shah Jahan mosque in UK, and Singers Hill Synagogue in England and many others.xlvi

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Religions by ethnic group, UK census 2001 Ethnic group White British White Irish Other White Mixed Indian Pakistani Bangladeshi Other Asian Black Caribbean Black African Other Black Chinese Other (table 2) LANGUAGES: There are many languages in use in UK. However, the main language spoken in UK is British English, which is 50% derived from Latinxlvii and is used by 95% British population and is an official language of UK. Wales, Scotland and Northern Ireland have their separate main languages i.e Welsh, Gaelic Scottish and Irish gaelic respectively. Types of languages: Some other languages (immigrants and foreign) are also spoken in UK . Main Immigrants language includes Urdu, Arabic, Punjabi, Bengali, Greek, Italian, French and Russian, etc. The foreign languages spoken are French (23%), German (9%), Spanish (8%) The largest group (spoken by 2.7% of the total UK population) are South Asian languages such as Bengali, Punjabi, Hindi and Gujarati. Other community languages include Cantonese, Italian, Polish, Greek and Turkish and Urduxlviii. Christian Buddhist Hindu 75.94% 85.42% 62.67% 52.46% 4.89% 1.09% 0.50% 13.42% 73.76% 68.87% 66.61% 25.56% 32.98% 0.11% 0.19% 0.33% 0.70% 0.18% 0.03% 0.06% 4.85% 0.17% 0.07% 0.20% 15.12% 15.49% 0.01% 0.02% 0.09% 0.87% 45.00% 0.08% 0.60% 26.76% 0.29% 0.21% 0.36% 0.07% 1.32% Jewish Muslim Sikh 0.48% 0.18% 2.39% 0.47% 0.06% 0.05% 0.05% 0.30% 0.10% 0.05% 0.13% 0.05% 1.05% 0.14% 0.14% 8.61% 9.72% 12.70% 92.01% 92.48% 37.31% 0.79% 0.01% 0.02% 0.04% 0.42% 29.06% 0.05% 0.04% 6.22% 0.02% Other No Not religion stated 0.24% 15.45% 7.62% 0.26% 6.35% 7.42% 0.57% 15.91% 9.38% 0.58% 1.75% 0.04% 0.01% 0.93% 0.59% 23.25% 1.73% 0.50% 0.43% 3.44% 11.23% 11.54% 4.63% 6.16% 5.83% 6.79% 13.04% 8.14%

20.04% 0.09% 5.97% 0.07% 0.33% 0.03% 25.68% 1.02%

0.21% 2.31%

0.65% 12.09% 13.93% 0.49% 9.75% 52.60% 0.90% 14.08% 7.48%

24

Official languages: Some languages are used within defined territories as official languages. Welsh is official language besides English in the printed documentation and websites by all british departments. Since 2002 the Cornish language has been recognised by the United Kingdom government as a UK official minority language under the Council of Europe's European Charter for Regional or Minority Languages. Norman French is still used in the Houses of Parliament for certain official business between the clerks of the House of Commons and the House of Lords, and on other official occasions such as the dissolution of Parliament.xlix

25

ANALYSIS OF DATA:
RETAIL SALES: The following figure illustrates the retail sales of UK as per monthly basis.
4 3 2 1 0 2012 -1 -2 -3 -4 -5 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

JAN

FEB

MAR

APR

MAY

JUN

JULY

AUG

SEPT

OCT

NOV

DEC

(fig 4) 2002-2007: Between 2002 and 2007, there was an 8.5% increase in the number of stalls, markets and other not-in-store retailers. However, the number of enterprises has fallen by 15% between 2005 and 2007 but the sector grew by 12% in the same period. The overall trend has been one of a reduction in the number of enterprises, but continued increases in employment and turnover. Between 2002 and 2007, there was an 8.5% increase in the number of stalls, markets and other not-in-store retailers. Therefore the level remains same.l 2008 (Jun-July): It was the time when global recession hit UK. The impact can be clearly seen in mid 2008. The main reason attributable to the above change is that 83% of retailers were expecting the UK economy in 2009 to deteriorate. One another reason for this drop back was that consumers
26

were pessimistic about the future and their focus was concentrated towards the necessities and therefore non food retailers which account for 52% of retail enterprises and 37% turnover were hampered.li 2009 (March): Though food sales remain almost same (0.3% drop) but there was a big drop in non food retail sales by 3.7% from last month. Another reason for such a decline was the historical devaluation of GBP against USD at 1.4554 per dollar. The devaluation of pound made imports costly and that reduced consumer spending.
As per ONS, The sudden downturn in the housing market, and restrictions on bank lending have changed spending habits, that have produced a big fall in the value of household goods being sold.lii

2010 (Feb- Mar): Jonathan Loynes, chief European economist at consultants Capital Economics, said high inflation, rising unemployment and record public borrowing, added a sharp drop in high street spending. This tells us the story, the rising unemployment and BOE quantitative easing and thereby inflation were the biggest reasons for such a sharp decline in Feb of 2010. There were also high snow fall in UK, Snow fell in Britain every day for four weeks, which jammed the economy, thus it was another important reason for decline. VAT were also risen by government. On march 2010, sales bounced back after feb drop, because automotive fuel was dropped by 11% last month and in March, because of this, its sales volume increased by 9.1%. The main drivers of the growth were increase in sales was led by an 11.2 percent jump at household goods stores, textile, clothing and footwear shops had a 1.1 percent gain.liii GBP rose by 0.4% against USD and job less claims were reduced, that also boost up sales.

27

INDUSTRIAL PRODUCTION:
6 4 2 0 -2 -4 -6 -8 -10 -12 -14 JAN FEB MAR APR MAY JUN JULY AUG SEPT OCT NOV DEC 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

(Fig 5; year on year comparison) 2002-2007: The industrial production like retail sales remain fairly even during the tenure of 2002-2007 as shown in fig 5. The production industries accounted for 15.0 per cent of GVA of UK.liv The reason for such even pace was that interest rates were maintained at the level between 35.5%, oil prices were moving in between 40-78$ per barrel and capacity utilization remained average as shown in table below. 2008 (Nov- Dec): After being hit by the recession, the industrial production of UK saw a big decline in the industrial capacity utilization by more than 10% (combined) at the end of 2008 and were down to the low levels. The ONS said the drop in manufacturing over the month was driven by transport, mainly cars and auto parts -- car sales have collapsed across Europe in recent months -- chemicals and paper and publishing.lv Manufacturing fell for 7 consecutive months (the longest drop since 1980). Another reasons were that oil prices reached record high of 140 $ a barrel and ECB raises interest rates to 7 year high of 4.25%. 2009: The impact of recession continued and UK industries fell further short of capacity utilization. The year 2009 is marked as the most harmful year for industrial production in UK. The industrial
28

production in UK dropped from sharpest annual rates since 1968. Industrial output manufacturing, utilities and mining dropped by 12.5% in February from a year ago, biggest fall since 4 decades. See table 3 Manufacturing production alone fell by 0.9% in February from the month before, The main decline was in transport equipment sector (cars etc) followed by electronic equipments and then machinery retreat (construction). World demand was very low after recession and that was the key reason for low production as per Mark Miller, an economist at HBOS, said: "World demand is the real key and until that starts to show some signs of light it is premature to think that the manufacturing sector in the UK will turn around quickly."lvi 2010 (Apr Oct): On April 2010, Industrial production went positive after being negative for 22 months. The main reasons for this improvements were the interest rate cuts to a record low by both Bank of England and ECB to 0.5% and 1.5% respectively. Further BOE, IMF, G20 and regional banks provide huge sums in terms of quantitative easing to industries. Oil prices were also kept low around 70-80$ per barrel by OPEC.lvii Of the 13 categories in manufacturing, 11 rose and two fell, the statistics office said. Manufacturing, which accounts for about 13 percent of the economy, rose 1.4 percent on the year, the biggest annual gain since February 2008.lviii Sept and October 2010, experienced the highest growth rates of 4.3 and 3.8 respectively due to above consequences. 2012 (Feb and Jul): The upward trend in industrial production again came back in trouble with the begging of 2012. Out of 13 categories in manufacturing, six declined and seven rose in January from the previous month as per ONS. The biggest declines were in the categories of food and beverages, transport equipment and chemicals, which form the most part of the industrial sector of UK.lix Another main reason was that input prices jumped 2.1 percent on the month and 7.3 percent on the year. The monthly increase was driven by a 5.8 percent surge in crude-oil and gas prices. One another reason was that Germany (Europes largest economy) and Britains biggest trading partner was hit by cold in Feb and therefore its production was down by 1.3% from January. The main reason for July decline is the decline in consumer durable sector by more than 9% in entire Europe and around 7% in EU and manufacturing output, (excluding the energy and mining sectors), was 0.5% lower than July 2011 in UK.lx Though on year year comparison, July production was down severely, however on month on month basis, the industrial production
29

rose sharply by 2.9% mainly because manufacturing output rose by 3.2%, the fastest pace for 10 years, after falling by 2.9% in June.

Percent of capacity Average 19722011 198889 high 199091 low 199495 high 2009 low 2011 Aug. 2012 May[r] June[r]

Capacity growth Aug. '11 t o Aug. '12

Capacity utilization Total industry Previous estimates

Mar.[r]

Apr.[r]

July[r]

Aug.[p]

80.3

85.2

78.8

85

66.8

77.1

78.4

79

78.9

78.9

79.2

78.2

1.4

78.4 Manufacturing Previous estimates Mining Utilities Stage-of-process groups Crude Primary and semifini shed Finished 87.3 86.3 86.3 92.9 83.9 84.3 88.6 93.3 78.5 79.1 87.7 78.6 77.4 89.1 72.3

78.9

78.9

78.9

79.3

78.8

85.6

77.3

84.6

63.8

75.2

77.4

77.8

77.3

77.5

77.7

77

1.3

77.8 89.5 73.9

77.3 89.3 77.7

77.6 89.7 75.4

77.8 90.4 76.2

88.6 73.3

2 2.3

86.3

87.7

84.4

89.7

76.4

85.7

87.1

87.5

87.1

87.4

87.7

86.3

1.5

81.1 77.2

86.5 83.4

78 77.3

87.9 80.6

64.2 66.8

74.6 76.4

75.4 78.1

75.9 78.7

76.4 78.1

76.1 78.3

76.5 78.5

75.4 77.7

0.2 3

(table 3)

30

GDP GROWTH RATES:

Q-Q growth
1.5 1 0.5 0 -0.5 -1 -1.5 -2 -2.5

2008 Q1

2002 Q1

2002 Q3

2003 Q1

2003 Q3

2004 Q1

2004 Q3

2005 Q1

2005 Q3

2006 Q1

2006 Q3

2007 Q1

2007 Q3

Q-Q growth 2008 Q3 2010 Q1 2009 Q1 2010 Q3 2009 Q3 2011 Q1 2011 Q3 2012 Q1

(Fig 6)

2003 (Q2-Q4): In 2003 (Q2-Q4), GDP of UK grew by 1.2% consecutively. The main drivers of that growth were the construction sector growth (8%), transport, hotels and restaurants (5%) and (8.6%) in health and education. lxi Another main reasons were the UK housing boom in 2002 Oct, by which housing prices were peak at 30%.UK and ECB interest rates were reduced by 0.25% both.lxii The fall in unemployment by government labor reform programs helped boost productivity and growth. 2005 (Q2 and Q4): The main reason for 1.2% growth in Q2 and 1.1% in Q4 of 2005 was the outstanding growth in the following main sectors of economy, production sector (5.8%), (6.8%) in construction (6.7%) in professional services and 7.5% in health and education. Consumer spending also registered a growth of 0.4% in June 2005. The ONS said the services sector, which is the largest sector of the UK economy, grew 1.0% in the quarter and overall grew by 3.3%.

31

2007 (Q1, Q2 and Q3): Q1, Q2 and Q3 of 2007 registered a growth of 1.1%, 1.2% and 1.2% respectively. The main drivers of the growth were the production sector (16.9%), construction (11.4%) and (8.3%) in real estate sector. Another reasons were the huge decline in oil prices, Euro became the leading currency in debt market and government tax receipts were boosted by the immigrants from eastern Europe.lxiii 2008 (Q2) 2009(Q1): Q2 of 2008 saw negative growth of -0.9%, Q3 of 2008 saw a negative growth of -1.8%, Q4 of 2008 had negative growth of -2.1% and Q1 of 2009 saw a negative growth of -1.5%. That was the era of global recession. The main drivers of that decline were production (5.3%) and construction (9.2%). The main reasons were the stoppage in bank lending due to financial crisis, Oil prices reached record high levels, UK house prices recorded biggest fall of 12 years, pounds drop to the lowest level against Euro, making imports costly from with in EU zone to UK.lxiv Workforce jobs were down by 1.75% from last year. International investors lose their confidence in UK economy. Some large corporations were bankrupted. It was the longest recession in UK history since 1955. 2009-2012: In Q3 of 2009, UK economy again went into positive growth region. BOE, ECB, G20 and other bodies took hard steps to overcome this recession. From October 2008 to March 2009, interest rates were cut down from 4.5% to only 0.5% lowest since 1951. Large sums of money were injected into the economy in terms of quantitative easing by BOE, ECB and other bodies. VAT were cut down and global movements were favorable including stable oil prices. Since Q3 of 2009, UK economy has been moving at moderate level. The BOE has maintained the same interest rate since 2009 and the sectors are posing slow but moderate growths. There have been improvements in sector performances and lending institutions are kept standby to support any other turmoil. The upward revision to growth came as output of services, construction and agriculture were revised slightly higher, as per ONS.lxv The upward revision to growth came as services output was revised to 0.5 percent, the biggest increase since the first quarter of 2008 and Consumer spending rose 0.4 percent, the biggest gain since the first quarter of 2008.

32

IMPORTS AND EXPORTS:

UK is an industrialized economy and is the 7th leading importer and the 11th leading exporter in the world as per 2010, and the world's fifth-largest trading nation. Exports: UKs exports are valued at $ 41.4 bn as of 2012. Since UK is an industrially developed country, most of its exports are Manufactured goods. Following are major exports of UK, Manufactured goods, fuels, chemicals, food stuffs, beverages, tobacco, clothes, cars, military equipment, entertainment, steel, computer software, finance, banking, electrical goods, electronics, machinery, pharmaceutical products, etclxvi. Though UK also exports services, more than 60% of UK exports are goods. Machinery and transport, manufactured goods and chemicals are Britain's largest export earners. Britain is the world's second largest exporter of services, including banking, insurance, stock broking, consultancy and computer programming.lxvii Main exports are Items Telecommunications equipment Crude petroleum Automobiles Automatic data processing equipment Medicinal and pharmaceutical products Aircraft Engines and motors (table 4, exports as of 2000) Imports: UKs imports are valued at $ 42.9 bn as of 2012. Like exports, most of UK imports are manufactured goods, machinery, fuels; foodstuffs. Most of UK imports are goods (76%) of which finished goods are major head. See table on next page. % Of total 5.8 5.6 5.1 5 3.9 3.6 3.5

33

Items Consumer goods Food Fuels Industrial supplies Machinery Transportation Other (table 5, imports as of 2000)

% Of total 18.10 7.20 4.40 22.80 29.50 17.00 1.00

Following figure shows UKs major trading partners. Rank Country 1 GERMANY 2 USA 3 NETHERLANDS 4 FRANCE 5 IRISH REPUBLIC 6 BELGIUM (table 6, exports partners) Rank 1 2 3 4 5 6 Country Share (%) 11.6 10.6 8.4 7.8 6.4 5.7

Share (%) 13.2 8.7 7.5 6.1 6 5

GERMANY CHINA NETHERLANDS USA FRANCE BELGIUM and Norway (table 7, imports partners)

34

IMPORTS ANALYSIS:

Imports (% change monthly)

6.00% 4.00% 2.00% 0.00% -2.00% -4.00% -6.00% -8.00% 2012 Mar Nov Jun Jan Sep Apr Dec Jul Feb Oct May 2007 Aug Mar Nov Jun Jan Sep Apr Dec Jul Feb Oct May 2002 Imports (% change monthly)

(Fig 7) 2003 (Sept and Dec): The imports of UK in January 2003 rose by 4.7% and in September by 4.67%. One major reason for that was the huge decline in exchange rates, GBP declined from 1.6165 to 1.5735 in August. Another reason was there was a radical increase in UK imports from developing countries.lxviii Imports of services was the major driver of growth. This was the time when UK posed high growth rates (as explained in q-q gdp) segment. 2005 (Jul-Sept): UKs imports grew by 2.34%, 4.144% and 1.03% from July to September respectively. The main driver was the rise in imports of goods by 11.3% from 2004. Another main reason was the crude oil prices were highly increased. BOE cut interest rates. 2006 (Jun-July): UK imports decline by almost 12% combined of Jun and July 2006. The main was the decline in imports of goods by 2.9%. The main reasons were that interest rates rose by major bodies including ECB, BOE and US federal reserve. 2008 Aug-Jan 2009: UK imports fell badly in this phrase by more than 13% combined. The main reason was the global recession of 2008, occurred because of mortgage crisis in USA. Pound and USD fell against Euro, making imports costly and oil prices reached record high.
35

2009 (Sept- Oct): The imports rose by around 8% combined in September and October 2009. The main driver was the rise in goods by 17%. lxix The main factors contributed to such huge growth were the decline of interest rates to historic low 0.5%, QE program by monetary authorities to UK, Oil prices were down and recovery from global recession of 2008. 2011 (May and onwards): The Imports rose by astonishingly 4.94% on May 2011. The main reasons were the manufacturing sector output grew at fastest rates in 16 years. Followed by increase in private investments and QE and interest rate relief from BOE and ECB. There from, imports remain steady and main rise is in servicing sector as manufacturing fall in 2nd half of 2011.lxx

36

EXPORTS ANALYSIS:

Exports (% change monthly)

0.12 0.1 0.08 0.06 0.04 0.02 0 -0.02 -0.04 -0.06 -0.08 -0.1

Exports (% change monthly) 2012 Mar Nov Jun Jan Sep Apr Dec Jul Feb Oct May 2007 Aug Mar Nov Jun Jan Sep Apr Dec Jul Feb Oct May 2002

(Fig 8) 2003 (JAN, MAY & JULY): The exports rose by 8.312%, declined by -4.983% and again rose by 4.753% in jan, may and july respectively. The main rise (throughout the year) was in exports of services by 8.46% in 2003. The main reasons for rise in jan was the interest rates cut by US fed to 40 year low (increase demand in US), Euro was implemented across EU, which boosts UK exports. The reasons for May decline was the passage of U.K. Export Controls act in 2002 which impose controls on various commercial activities, especially with US, start of gulf war and manufacturing job losses were reduced to record low.lxxi The reasons for July rise were the GDP growth and increase in consumer expenditure by households and government. 2005 (Aug- Sept): Exports were down by -4.652% in Aug and subsequently rose to 9.652% in September. The main
reason for decline was the decline in finished manufactured products by around 4% from last year. lxxii and also rise in oil prices. The main rise was in manufacturing sector which grew by 10.85%. Hurricane in USA, also rose demand (which is the one of the major partner of UK imports). BOE rate cuts also help increase exports.

2006 (Jan-Mar & Jun-July): Exports rose by almost 13.5% combined of Jan-Mar in 2006. The main increase was in exports of goods which was 15%. The main reason was high GDP growth in last quarter of 2006. Another reason was the improve in productivity implied by increase in workforce jobs. lxxiii
37

Exports saw a decline of combined almost 12% in Jun-July. The main reason for decline in exports were reduced spending from households and governments. Another reason for such a decline was raise in interest rates by ECB, BOE and US Fed. Oil prices also were also high.lxxiv 2008 Aug- 2009 Mar: This was the era of recession and thus UK exports fell by consecutively 8 months for more than 15% combined. The main decline was in goods sector which fell by 9.5% from last year. The main reasons were the decline in productivity reflected by workforce jobs reduction, record high prices of oil, low bank lending and high exchange rate of pound against USD on Aug 2008. 2010 (Jan- Feb): In Jan 2010, exports fell by 4.33% and subsequently rose by 5.05% in Feb. The reasons for decline was high GBP rate against USD despite of weaker economy, low productivity and job cuts and low targeted bank lending. The main rise was in goods sector which grew by 16.5% from last year. The growth was driven by QE, stability in oil prices, huge devaluation in GBP and low interest rate across EU. 2012 (Apr and onwards): Exports fell by 6% in April 2010 and subsequently rose and down by 4.7% in may and June respectively. The main decline was in goods sector. The main reasons were low exports to EU, low bank lending and low productivity in manufacturing export orderslxxv. The reasons for May June breakeven was lower GBP exchange rates, improvement in exports to EU and continuous QE programs by monetary authorities.

38

TRADE BALANCE ANALYSIS:

2.5 2 1.5 1 0.5 0 -0.5 -1

Trade Balance (% change monthly)

Trade Balance (% change monthly)

(Fig 9) 2003 (May and Sept): UK trade balance increase by 204% in May and then again by 110.8% in September. Mainly because the imports increase sharply (6%) as against exports of goods (1.3%). The reasons for the uprise in May and Sept were UK interest rates reduced, gdp growth was unchanged. 2nd gulf war also broke out which hampers UK exports in this region. 2005 (Aug): Trade balance rose by 75.93% in August. The main rise was in import of goods (11.3%) against exports at 10.8%. The reasons for such decline were decline in industrial production for many consecutive months (See fig 5), oil prices reached high levels, interest rates were maintained at high level of 4.75%, USA (major trading partner of UK) was hit by hurricane. 2006 2009: The Trade balance of UK in this phase remains stable, averaging growth of around 0.5% (refer excel file). The reason for such stability was that the imports of services grew by around 3% and exports by 7.5%. where as imports of goods declined by 0.55% on average and exports reduced by 29.9% on average from 2006-09. Despite of recession in 2008, the position remained stable as interest rates were maintained between 3-5.5% by BOE and ECB by 2.5-4%, oil prices remained. There was rise in productivity as workforce jobs were continuously increased by workforce jobs averaging growth of 0.71% since 2006-2009. GBP were moving around 1.6-1.8 per USD.
39

2012 Feb Sep Mar Oct Apr Nov May Dec Jun 2007 Jul Jan Aug Feb Sep Mar Oct Apr Nov May Dec

2010 (Feb, March and July): Trade balance reduced by 47.208%, increased by 78.700% and then again increased 50.798% in Feb, Mar and Jul respectively. The main decline in Feb was that import of goods grew by 17.10% whereas exports grew by only 16.2%. lxxvi The main reason for this improvement was the low interest rate by ECB and BOE, oil prices remained under 80$ per barrel and QE extension by lending bodies. The increase in deficit was due to decline in productivity by 0.7% since last year. while exports to the eurozone increased, exports to non-EU countries dropped more than that. The main reason for march sharp decline was the value of imports rose 5.2% on the month in March, the largest increase since September 2009, while exports grew by 1%, because of lower GBP/USD rate. The main reason for July decline was increase in imports of chemicals and oils and decline in exports, because of high oil prices and VAT imposition. 2011 (May, Sep-Dec): Trade balance grew by 47% in May. Imports rise 1.6% more than exports because of high exchange rates despite weaker economy. Despite good manufacturing performance, low credit conditions hurt exports and thus widened traded deficit. Major imports were made in large sectors including clothings and chemicals. No major trading partner of UK were, among the high growing economies, thus exports lost their potential. Trade deficit increase by more than 50% in September and November and declined by 52% and 61% in Oct and Dec respectively. The main reason for decline was industrial output fell for few consecutive months with decline manufacturing output. High rise in oil imports coupled with fall in employment and low shop price inflation put trade deficit high. The rise was due to inflation in producer prices and QE by BOE. 2012 (Feb, Apr, Jun and Jul): Deficits were 67.310%, 49.252%, 58.557%, -64.786% respectively in above months. 3 months pose a strong deficit. The main reason for this was that imports remain flat and exports were down. Reasons include euro zone crisis, Exports to non EU countries fell also by 9%, rising oil prices also hampered. Balance of trade in services remains stable but goods saw a decline. Manufacturing and construction output fell sharply.lxxvii GDP growth was also a major driver. July saw an improvement in deficit because QE boost by BOE. The increase in exports was led by oil, chemicals and consumer goods. Within imports, the biggest declines were recorded by oil, semi-manufactured goods, which are major sectors. Services sector saw a surplus of 5.6 bn . GBP devalued high in past month which boost exports.

40

CPI ANALYSIS:
1.2 1 0.8 0.6 0.4 0.2 0 -0.2 -0.4 -0.6 -0.8 -1 DEC NOV OCT SEP AUG JUL JUN MAY APR MAR FEB JAN 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

(Fig 10) 2003 (JAN): The CPI for January was 0.6% down. The main reason for such declines was the cut in interest rates by ECB to 40 year low level of 1.25. The main driver was house price inflation which surged to 30% and Euro currency started circulation in UK. 2004-2005: Throughout these 2 years, CPI remain stable in between 0.2-0.5%. The main reason for that was GDP was having steady growth, sectors were posing positive output and workforce jobs were increasing. ECB and BOE cut interest rates and BOE rates remained around 3.75-4.5%. Due to this UK inflation target changes to 2.0 per cent based on the Consumer Prices Index (CPI). 2006 (Apr and Dec): CPI in these 2 growth at 0.6%. The main reasons for that was Oil prices were rising and reached 70$ a barrel which increased input cost for manufacturing industries. There was also Russia/Ukraine dispute which lead to cuts in gas supplies in Europe, hampering production output. Hurricane hit US, imports became costly also.lxxviii 2007 (Jan, July and Dec): CPI dropped by 0.8%, 0.6% and grew by 0.6% in these months respectively. The reasons for decline was BOE and ECB increased their interest rates to 5% and 3.5% respectively and oil
41

prices dropped to low level of 65$. GBP was surged against USD, which also made imports cheap to production. The main reasons for increase in Dec were Oil prices reached their high level prices, Financial crisis took place, interbank rate hit high. Oil prices were also increased. 2008(Jan Aug): CPI declined to 0.7% in Jan and then remained on an average level of 0.5% upto August. The main reason for decline were that US Fed declined interest rates, making US imports cheaper and thus low cost push inflation. GBP was at high price of 2$, which also makes import cheap. Another big reason was that house prices fall their 12 years level. And then average growth was due to BOE interest rates were cut, Crude oil record high price, GBP fell against Euro making imports from EU expensive. 2009 (Jan and Feb): CPI fell by 0.7% in Jan, followed by 0.9% increase in Feb. The main reasons for decline were that Fuel and lubricant prices fell 15.2 percent on the year, the most since records began in 1997, BOE interest rates were reduced to very low rates and oil prices also set back. Cut in VAT to 15% was also cause this decline. The reasons for Feb growth includes Upward pressure on inflation from prices of games and toys, furniture, households appliances and alcohol, etc as per ONS, QE and increase in oil prices. 2010 Dec: CPI rose to 1% in 2010 dec. The reasons for such growth was Core inflation rose by 3%. Transport costs jumped a record 3.6 percent on the month, Food and non-alcoholic drinks rose 1.6 percent on the month. It was a cost push inflation as input-price inflation accelerated to 12.5 percent in December. GBP was also historic low. 2011 April and onwards: CPI reached again 1% level. The main reasons for such increase was rise in oil prices by 2.9%, imposition of duties on alcohol and tobacco and increase in VAT.lxxix Since April 2011, CPI has been stable and moving around the levels of 0.2-0.6%. The reason includes as per ONS, a drop in prices for housing, electricity, recreation and culture pushed overall inflation down. Other reasons include easing of eurozone crisis and improving US economy.lxxx

42

PPI ANALYSIS:
2.5 2 1.5 1 0.5 0 -0.5 -1 -1.5 Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

(Fig 11) 2002-2007: The PPI between 2002- 07 remains stable and in between 0.2-0.4%, with highest level in this era of PPI was 0.8% in Nov 2007 and lowest level of -0.5% in Dec 2004. The reasons for such even performance was that retail sales also kept stable (fig 1). Another reason for this stability was that all major sector of economy, throughout this period, posed moderate growth rates (excluding agriculture, which fall in 2005).lxxxi Another reason include maintenance of interest rates by BOE around 3-5.5% and ECB by 2.5-3.5%. Oil prices were also stable between 40-78 $ per barrel and GBP and capacity utilization remains average. 2008 (Jan May; Aug-Oct): PPI surged to 1.1% in Jan, 0.5% in Feb, 1.1% in Mar, 1.5% in Apr and 2% in May. The main reasons as per ONS, the rise in January was mainly due to increases in the price of petrol, chemical and food products and other manufactured products such as scrap metal. Petrol product prices rose by 1.4 pct between from December.lxxxii Crude oil reached 100$ per barrel in 2008 Jan. The rise in the May of 2% was also hit by increases in crude oil, imported parts, chemicals and metals and VAT measures in the budget 2009. The rise during the month was largely due to a sharp jump in the prices of petroleum and food products, as well as scrap metal, as per ONS. Another reasons were that extraction of minerals and fuel were lowered from previous year coupled with lower consumption and imports. lxxxiiiand fall in GBP against USD and Euro to record low and Global recession 2008.

43

Aug- Oct saw a decline in PPI by -0.7%, -0.3%, -0.1%, -0.9% respectively. The main reason as per ONS was the monthly drop in output prices was mainly due to petroleum products which contributed 0.58 pp to the drop. Another reasons include sharp reduction in crude oil to below 90$ a barrel and BOE interest rates cut by 1.5%.lxxxiv 2009: PPI started again to pose positive growths since it was a period when economy was recovering from recession. The reasons were BOE cut interest rates to lowest levels 1% in January and manufacturing decline was reduced from previous month by 0.2%. Since then there was a gradual improvements in PPI because interest rates were further reduced to 0.5% and QE was boost up by BOE and others. 2010 (Apr): PPI on Apr 2010 rose by 1.4%. The main reason for such a huge increase was led by a 4.1 percent increase in petroleum products. Prices for other manufactured products such as scrap metal jumped 3.9 percent. Another reason include decline of pound to 1.47 $ which made imports expensive, BOE low interest rate stream and high Crude Oil prices, thus contributed towards the rise PPI. 2011(Jan): PPI rose by 1% in Jan. The main reason was the rise in final prices of 4.8% with the gain led by food (1.6%), petroleum products (3.2%) and chemicals and pharmaceuticals (2.4%).lxxxv Input prices of crude oil (4.6%), metals (2.2%) and imported materials (2.1%) were also significant contributor to such a rise. Other reasons for such an upward movement was 2012 (Jun and onwards): The main reason for Jun 2012 decline in PPI after a long continuous growth was mainly because of the decline in Petroleum products (-3.3%) and Chemicals & pharmaceuticals (-1%) contributing to the decline of overall PPI. Clothing and paper & printing also declined but low. Input prices also declined sharply because of crude oil and imported metals. lxxxvi PPI since then is stabilizing and registered a growth of 0.5% in Aug because of rise in Petroleum products by3.2% Chemicals & pharmaceuticals by 0.9%. Another reasons include low exchange rates and QE by BOE and rise in crude oil.

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UNEMPLOYMENT RATE ANALYSIS:

9 8 7 6 5 4 3 2 1 0 2012 JAN 2011 FEB 2010 MAR 2009 APR 2008 MAY JUN 2007 JULY 2006 AUG 2005 SEPT 2004 OCT 2003 NOV 2002 DEC

(Fig 12) 2002-2005(Sep): This period (as explained by above indicators) was marked with stability. Unemployment remained in between 4.7-5%, with high of 5.4% in Sept 2002 and low of 4.8% in Oct-Nov 2004. The reasons were that output of all sectors grew on 5.2% annually throughout these years.lxxxvii Workforce jobs grew on average by 1.15% annually. The main reasons were interest rates were around 3-5.5% of BOE and 2.75-3.5% of ECB, Oil prices were between $ 40-60 a barrel, CPI targets were 2.0% annual, etc. 2005(Oct)-2006(Jun): Since Oct 2005, unemployment began to rise with 0.2% monthly growth to 5%. Each successive months till June 2006, experienced a monthly growth in unemployment by 0.1% (except Jan and Mar 2006). The reasons were that new jobs growth declined by 0.08% and 0.04% in 2005 and 2006 from 2002-2005 average. The main reasons for decline was job cuts in agriculture and production sector. lxxxviii The number of people in employment rose by 42,000 over the past three months, while job vacancies rose by only 7,600.lxxxix Another reasons include drop in US market because of hurricane, gas supply disputes and sharp rises in oil prices.

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2006(Jul)-2008 (May): In this period, job market remains fairly stable as unemployment moved around 5.5%. The reasons were that output of few industries rose while of construction industry dropped in 2007 which is the 5th largest employment provider.xc Other reasons were increase in interest rates by BOE uptil Nov 2007 and then decline. Cut in US fed reserve rates from 5.25 to 2.25 in this period, which boost US demand of UK goods, Oil prices reached high and put negative impact on job market, GBP reached a record low. 2008 (Jun)-2009 (Jun): From 2008 Jun, unemployment rose by 0.2% monthly uptil Jun 2009 (with only exception of Oct 2008 and Mar 2009, where it rose by 0.3%) for consecutive 13 months. The main reason for such is that the output of all industries declined (except Finance and Real estate) in 2009 by 18.7%. The main job cuts were in production, Construction and retail and whole sale sector. The other reasons were rise in Oil prices, higher interest rate regime and record low GBP rates against USD, low GDP growth and global recession. 2009(Jul)-2012(Aug): Since July 2009, unemployment rates has been stable and high at around 8% monthly, (with exception of the period Oct 2011- Mar 2012), when rates were around 8.3-8.4%. The reasons are that UK is recovering from recession and hasnt fully recovered yetxci. GDP grew in the Q3 of 2009, which help reduce unemployment growth rate and then subsequent GDP growth in quarters (from Q3 of 2009 to Q3 of 2011) averaging around 0.3-0.4%, help maintain unemployment rate at around 8%. The other reasons for stability include sharp reduction in oil prices from 140$ to around 60$ a barrel in May 2009, QE by BOE and other monetary bodies in EU and rest of the world, exchange rate grew, made imports cheaper and cut in interest rates by BOE and ECB to historic lows. xcii The main reason for Oct-Mar 2012, decline was , unemployment among 16-24-year-olds 1.04 million, the highest level since comparable records began in 1992.xciii Only service sector created significant jobs. Since then Unemployment is maintained at around 8% monthly because youth unemployment declined and manufacturing sector grew by 3.2% in July and constructions order increased. Olympics also help increase productivity.

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INTEREST RATES ANALYSIS:

7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2012 JAN 2011 FEB 2010 MAR 2009 APR MAY 2008 JUN 2007 JULY 2006 AUG 2005 SEPT 2004 OCT 2003 NOV 2002 DEC

(Fig 13) 2002-2004 (Apr): The interest rates remained stable at around 4.5-5.5% during this phase. The main reason was that outputs of sector was rising by around 5% and there has been over 1% growth in workforce jobs annually, So BOE kept interest non volatile at around 5%. Another reasons were that US fed interest rates were also low, Oil was stable at around 40 $ a barrel and GBP was stable at around 1.6-1.8 per USD. 2004 (May)- 2006(July): On may 2004, interest rates rose by 0.25%, further in June by 0.25% and then again in August by 0.25% to reach at 4.75% and this rate was maintained uptil July 2005. The main reasons were strong GDP growth in 2005 (Q2 to Q4) and 5.5% growth in sector outputs and CPI started rising. Rise in oil prices and US Fed rates increase were also the reason of these interval rises. The rates were slightly reduced to 4.5% in Aug 2005 and continued to July 2006. The reason was higher GDP growths and decline in GBP against USD. 2006 (Aug)-2008(Sep): On Aug 2006, interest rates again start increasing after remaining same for an year and rose to 4.75%, which further rose to 5% in Nov, then to 5.25% in Jan 2007, 5.5% in May 2007 and then to high of 5.75% in July 2007. The rates then declined to again 5.5% in 2007 Dec, then to 5.25% in Feb 2008 and finally come down to 5% level in April and continued uptil Sep 2008.

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The main reason for such rise were sharp growth in GDP from Q1 of 2007 to Q3 of 2007 and rise in output of sectors by 6.2% from last year, coupled with rising CPI, GBP was strengthened against USD and oil prices were rising sharply. However, the subsequent series of decline was due to decline in sector outputs annual growth rate to 3.6% from 6.2% of last year, decline in GDP growth from Q1 2008 to Q1 of 2009, and low growth in jobs. GBP was already at highest rate against USD and there was the begging of financial crisis, bank stops lending to each other and interbank rates were high. 2008 (Oct) -2009 (Mar): As soon as the global recession broke out, BOE reduced interest rates to 4.5% in Oct, followed by 1.5% reduction to 3% in Nov and further 1% decline to reach at 2% in Dec 2008. In 2009, interest rates were also dropped consecutively for 3 months by 0.5% to reach at record low of 0.5% in March 2009. The reasons for decline were negative GDP growth in Q1 and Q2 of 2009, followed by high rise in CPI, decline in oil prices and historic low level of GBP against USD. Large cuts by US Fed also were solid reasons. Outputs of sectors were reduced by 1.5% and job were reduced by 1.75%.xciv 2009 (Apr)-2012: Since April 2009 till date, rates have been unchanged at 0.5%. The main reasons were that economy was recovering from recession and GDP growths again became positive after posing negative growths in past few quarters with CPI and PPI moving in between 0.2-0.7% and 0.10.9% respectively. GBP has been stable at around 1.5-1.6 $. Despite of decline in manufacturing sector at times, BOE is committed to maintain its interest rate of 0.5% and is hopeful that economy will soon revive and completely overcome recession, thereby it is providing huge sums to these sectors in terms of QE from time to time.xcv

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EXCHANGE RATES ANALYSIS:

1400000 1200000 2 1000000 800000 600000 400000 200000 0 0 1.5 2.5

volume 1 market 0.5

(Fig 14) 2003 (Aug 22)- 2004(2o Feb): The GBP/USD rate from this period increased from the low of 1.5703 in Aug 22, 2003 to high of 1.9140 0n 20 Feb 2004. The reasons for such a rise were decline in growth from 0.7% in Q1 2004 to 0% in Q3. CPI and PPI were moderate and interest rates were increased by 0.5% and exports also rose, making GBP strong and outputs of sectors rose by around 5%. 2004 (Feb) 2005 (Apr 22): GBP/USD remain stable in this phase, registering high of 1.9507 in 10 th Dec 2004, and low of 1.7688 on 7 May 2004. The reasons include moderate growths in Q4 of 2004 and Q1 of 2005 and remained little in Q2 and Q3 of 2005. CPI was on average at 0.5% growth, PPI was little low but stable, interest rates remain unchanged and outputs of sector grew moderately at 4%. 6 May 2005 02 Dec 2005: GBP/USD were declined from high of 1.9172 on 29th April 2005 to low of 1.7047 in 2nd Dec 2005. The reasons for decline were that industrial output fell from April to Dec including high of -1.4% in Nov and Dec. GDP quarterly growths were declined in 2006 Q1 to Q3. Imports grew heavily where as exports were down and job cuts in production sector.
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2002.09.29 2003.02.02 2003.06.08 2003.10.12 2004.02.15 2004.06.20 2004.10.24 2005.02.27 2005.07.03 2005.11.06 2006.03.12 2006.07.16 2006.11.19 2007.03.25 2007.07.29 2007.12.02 2008.04.06 2008.08.10 2008.12.14 2009.04.19 2009.08.23 2009.12.27 2010.05.02 2010.09.05 2011.01.09 2011.05.15 2011.09.18 2012.01.22 2012.05.27 2012.09.30

14 Apr 2006- 11 Nov 2007: GBP/USD rose sharply from low of 1.7249 on 7th Apr 2006 to high of 2.1158 in Nov 11, 2007. The increase was due to high GDP growths from 2006 Q4 to 2007 Q3. Imports were declined more than exports, interest rates were sharply increased and upward trends in CPI and PPI. Sectoral outputs increased by 10%. Nov 2007- 18 July 2008: GBP/USD remained stable in this period with high of 2.1158 on 11 Nov 2007 to low of 1.9813 on 18th July 2008. The main reason for this stability was a mixed trend, decline in GDP after posing high growths, retails sales were increased, CPI and PPI were increased, interest rates were sharply down, sector output grew slowly and trade balance was stable. 25 July 2008 16 Jan 2009: GBP/USD declined from high of 2.007 on 25 July 2008 to low of 1.3502 on Jan 23, 2009. The reasons include consecutive negative growths in GDP since past 5 quarters. Sector output declined, interest rates were sharply reduced, sharp reduction in exports as well as imports, CPI and PPI declined astonishingly. 13 Mar 2009- 7 Aug 2009: GBP/USD increased sharply from low of 1.3654 on to high of 1.7040 of 7 Aug 2009. The reason for such a rise was rise in GDP growths in Q3 and Q4 of 2009. CPI and PPI grew moderately, interest rates were reduced to historic lows, trade balance was moderate. 20 Nov 2009- 21 May 2010: GBP/USD declined from high of 1.6875 on 20 Nov 2009 to low of 1.4227 on 21 May 2010. The reasons for such sharp decline were retail sales and industrial production were sharply reduced. GDP growth was slow, interest remains were unchanged, PPI sharply increased and fall in exports and increase in trade deficit and QE (quantitative easing) by BOE. 4 Jun 2010 13 Aug 2010: GBP/USD rise from low of 1.4224 on 4 June to high of 1.5994 on Aug 13, 2010. The reasons for such a rise was rise in GDP growth, industrial production was highly increased, retail sales stabilize, CPI and PPI were little increased, interest rates remain unchanged and unemployment stabilized.

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31st Dec 2010 6th May 2011: GBP/USD appreciated from low of 1.5344 on Dec 31 to high of 1.6745 on 29 April, 2011. The reason for this rise was GDP growths in Q1 and Q3 of 2011. Retail sales were increased, industrial production was astonishingly high, CPI rose sharply and exports were increased. 26 Aug 2011- 7 Oct 2011: GBP/USD declined from the high of 1.6570 on 26 Aug 2011 to low of 1.5271 on 7 Oct 2011. The reasons for such massive decline was that downward trend in GDP growths, retail sales decreased, industrial production was down, rise in imports and high trade deficit also contributed to this downswing. 4 May 2012 1 June 2012: GBP/USD declined from high of 1.6300 to low of 1.5266 on 1 June 2012. The reasons were that GDP growth declined in Q1 of 2012. Retail sales were heavily down, industrial production was heavily declined, CPI and PPI both declined, exports fall high and trade deficit widened. 8th June 2012 and YOD: Since 8th June of this year, bullish market has been following. The reasons include retail sales have been positive, industrial production is improving, decline in imports, rise in exports and trade deficit decline, growing CPI and PPI and stabilized unemployment rates.

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COMMENTS & CONCLUSION Comments:

After analyzing the above indicators, One can get equipped with the main indicators of UK economy specially the years between 2002-2012. The impact of recession, the economy before and after that is comprehensively described. After going through above analysis, UK economy looks to have absorbed the shocks of recession 2008-09, and is performing better as indicators are becoming favorable. The main impetus must be GDP growth which is mainly derived by Service and production sector, So special attention is due in this area and particularly in industrial production and construction. EU and other trading nations of UK are also growing since recession and their improved economies result in uprise in UK economic growth.

Conclusion:
I came to the conclusion, that UK economy is still not fully recovered from recession but posing fair growth rates and will soon get completely out of it. UK economy will surely maintain its place current status in world economy and may further improve in the coming years.

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References and end notes:

i

The future of UK manufacturing: Reports of its death are greatly exaggerated". PricewaterhouseCoopers. Retrieved 25 April 2011. ii http://en.wikipedia.org/wiki/Manufacturing_in_the_United_Kingdom iii Motor Industry Facts 2012 iv http://en.wikipedia.org/wiki/Aerospace_industry_in_the_United_Kingdom#cite_note-ukti-1 v http://www.theengineer.co.uk/Journals/1/Files/2011/6/9/23058201106081647960.pdf vi https://docs.google.com/viewer?a=v&q=cache:suTSgv6aF0wJ:www.bis.gov.uk/assets/biscore/innovation/docs/s/ 11-p90-strength-and-opportunity-2011-medical-technologysectors+uk+pharmaceutical+industry+turnover&hl=en&gl=pk&pid=bl&srcid=ADGEESgTBeIYYO6g7Sp8jSobzig869p_ SSfXrcbACTaW98wky59_Wzhalnk4PPYt6fI49K8aFWnSTt-y8j0fCCWaZxcUEVZLWnWa-vtj7t7DDrB91h7yUfzhuOImiL6g_ZlfmnhhDh9&sig=AHIEtbQbl5M_PrbxQ14_nFbOjapgW69pSg vii http://www.stockholm-network.org/downloads/publications/UK_Pharma_Industry_Carroll_Jan_09.pdf viii ONS, Blue book 2011 ixix http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom#cite_note-ukti-58 x ONS, Blue book 2011 xi http://www.reuters.com/article/2011/04/27/britain-grocers-kantar-idUSLDE73Q0TP20110427 xii http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom#cite_note-109 xiii Financial sector contribution to the economy by Maer and Broughton, pg 5 xiv http://rogerdarlington.me.uk/Britishpoliticalsystem.html xv www.rogerdarlington.me.uk/Britishpoliticalsystem.html xvi http://en.wikipedia.org/wiki/Politics_of_the_United_Kingdom xvii http://en.wikipedia.org/wiki/Politics_of_the_United_Kingdom#Judiciary and xviii http://rogerdarlington.me.uk/Britishpoliticalsystem.html xix http://en.wikipedia.org/wiki/Politics_of_the_United_Kingdom#Judiciary xx www.rogerdarlington.me.uk/Britishpoliticalsystem.html xxi http://www.charitychoice.co.uk/charities xxii http://en.wikipedia.org/wiki/Social_structure_of_the_United_Kingdom#cite_note-6 xxiii http://www.businessballs.com/demographicsclassifications.htm xxiv http://en.wikipedia.org/wiki/List_of_countries_by_literacy_rate xxv http://en.wikipedia.org/wiki/Poverty_in_the_United_Kingdom xxvi http://golondon.about.com/od/currency/a/currency.htm xxvii http://www.aboutcurrency.com/university/fxcourse/major_currency_pairs_personalities.shtml xxviii http://en.wikipedia.org/wiki/Pound_sterling xxix http://en.wikipedia.org/wiki/Reserve_currency xxx http://en.wikipedia.org/wiki/Geography_of_the_United_Kingdom xxxi http://en.wikipedia.org/wiki/English_Channel and xxxii http://en.wikipedia.org/wiki/Geography_of_Wales xxxiii http://www.state.gov/r/pa/ei/bgn/3846.htm xxxiv http://en.wikipedia.org/wiki/UK#Geography xxxv http://en.wikipedia.org/wiki/Demography_of_the_United_Kingdom xxxvi http://www.woodlands-junior.kent.sch.uk/customs/questions/population.html xxxvii http://www.christian-research.org/population/population-by-region.html xxxviii http://en.wikipedia.org/wiki/Demography_of_the_United_Kingdom#cite_note-autogenerated1-14 xxxix http://www.indexmundi.com/united_kingdom/demographics_profile.html xl http://en.wikipedia.org/wiki/Demography_of_the_United_Kingdom#cite_note-18 xli http://www.indexmundi.com/united_kingdom/demographics_profile.html xlii http://www.indexmundi.com/united_kingdom/demographics_profile.html xliii Blue book 2011 xliv http://www.guardian.co.uk/news/datablog/2011/may/18/ethnic-population-england-wales#data

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xlv

http://en.wikipedia.org/wiki/Religion_in_the_United_Kingdom http://en.wikipedia.org/wiki/Religion_in_the_United_Kingdom#Roman_Catholicism xlvii http://www.woodlands-junior.kent.sch.uk/customs/questions/language.html xlviii http://www.bbc.co.uk/languages/european_languages/countries/uk.shtml xlix http://en.wikipedia.org/wiki/Languages_of_the_United_Kingdom#cite_note-41 l http://www2.warwick.ac.uk/fac/soc/ier/ngrf/lmifuturetrends/sectorscovered/retail/sectorinfo/ li http://www2.warwick.ac.uk/fac/soc/ier/ngrf/lmifuturetrends/sectorscovered/retail/sectorinfo/ lii http://news.bbc.co.uk/2/hi/business/7965278.stm liii http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6wn9RaAP2w0&pos=7 liv Blue book 2011 lv http://www.forexfactory.com/news_archive.php?id=123257 lvi http://www.guardian.co.uk/business/2009/apr/07/industrial-production-falls-recordrate?INTCMP=ILCNETTXT3487 lvii Blue book 2011 lviii http://www.bloomberg.com/news/2010-04-08/u-k-manufacturing-surged-1-3-in-february-twice-as-fast-as-wasforecast.html lix http://www.bloomberg.com/news/2012-03-09/u-k-manufacturing-increases-less-than-forecast-in-january-1.html lx http://www.bbc.co.uk/news/business-19515491 lxi Blue book 2011 lxii Blue book 2011 lxiii http://news.bbc.co.uk/2/hi/business/6213496.stm and blue book 2011 lxiv Blue book 2011 lxv http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGWeS5KRLsxI lxvi http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom#Exports lxvii http://wiki.answers.com/Q/What_are_major_imports_and_exports_of_the_UK lxviii https://docs.google.com/viewer?a=v&q=cache:6iGJvw9aUWoJ:www.odi.org.uk/resources/docs/4675.pdf+uk+i mports+rise+in+2003&hl=en&gl=pk&pid=bl&srcid=ADGEESiA1DMPFhy_ai1HkNQDZdHjhCqNDWWiwPiUohh9K4sW6IhIgRiX7J2MbNGEsA1IaDTCamb__cjFE1Vo8iyOWYNA0dPKWzo s_5c5BoN-0RVjvJ4KyskI8cg_k5KS-a3lg1vH5Od&sig=AHIEtbSWTQPcOKRhuQqtrV3fxjRzFAaKdQ lxix Blue book 2011 lxx http://www.google.com.pk/url?sa=t&rct=j&q=uk+manufacturing+2011&source=web&cd=1&cad=rja&ved=0CB0 QFjAA&url=http%3A%2F%2Fwww.bbc.co.uk%2Fnews%2Fbusiness14746181&ei=aydxUJvZIJGrrAfwj4GoDQ&usg=AFQjCNFK4WvmM-7V5Ta4fCnV9B9G6Z3_qQ lxxi Blue book 2011 lxxii http://tutor2u.net/economics/presentations/ukbofp2006/default.html lxxiii Blue book 2011 lxxiv Blue book 2011 lxxv http://uk.reuters.com/article/2012/05/15/uk-goods-trade-deficit-idUKBRE84E0C420120515 lxxvi Blue book 2011 lxxvii http://www.reuters.com/article/2012/06/15/us-britain-trade-idUSBRE85E0JA20120615 lxxviii Blue book 2011 lxxix http://www.telegraph.co.uk/finance/economics/8513878/UK-inflation-starts-to-rise-again.html lxxx http://uk.reuters.com/article/2012/03/20/uk-inflation-idUKBRE82J09Z20120320 lxxxi Blue book 2011 lxxxii http://www.forexfactory.com/news_archive.php?id=69513 lxxxiii Blue book 2011 lxxxiv Blue book 2011 lxxxv http://www.bloomberg.com/news/2011-02-11/u-k-factory-gate-prices-faster-than-forecast-fueling-inflationconcerns.html lxxxvi http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/june-2012/stb-producer-price-index--june2012.html#tab-Input-Prices--Detail
xlvi

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lxxxvii

Blue book 2011 Blue book 2011 lxxxix http://news.bbc.co.uk/2/hi/business/4797419.stm xc Blue book 2011 xci http://www.bbc.co.uk/news/business-18977084 xcii Blue book 2011 xciii http://www.bloomberg.com/news/2011-11-16/u-k-unemployment-soars-jobless-young-top-1m.html xciv Blue book 2011 xcv http://english.cntv.cn/program/newsupdate/20120406/106588.shtml
lxxxviii

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