UK Industry

Exploring the sizes of different industries in the UK, as well as how and why they have changed over time

The United Kingdom is a massive exporter of services due to its highly educated workforce and heavy specialisation because when it switched from secondary industry to tertiary or secondary-based industry, London was used as a hub for these companies, and so amassing these businesses in one concentrated group allows them to compete better and raise the quality of their services much faster. This, in turn, enabled the UK to transform into a highly efficient service-based economy. The transition into this system can be seen through the percentages of people employed in these different sectors, represented in the graph below.

It can be observed that after the beginning of the industrial revolution, the employment share for primary industry began to fall rapidly, due to two main reasons, the first and more prominent being that many people were moving to factories to work in the secondary industry, which is supported by the employment share for the secondary sector rising at around the same time. Additionally, the second reason which is often overlooked is that the industrial revolution meant that much more efficient machinery was being introduced into the market, including agricultural technology such as combine harvesters. This told that not only were workers leaving the industry, but also fewer workers were needed in agriculture and similar primary sector industries, as one person operating a combine harvester can complete a job that would require 10 to 20 labourers, and it can be done faster and more efficiently. While the secondary industry rose and the primary sector fell, the tertiary sector also increased, including services like sales and advertising. The companies producing goods in the secondary sector required these services to reach consumers and profit, so the tertiary industry was able to expand as well. However, the tertiary industry continued to rise even after the secondary industry dipped and plateaued due to foreign competition, as new services were invented and consumed. These did not involve physical goods at all like sales and advertising. These included financial services growing in size and variety, allowing the UK to prosper, especially in London.

Another reason for its service-based economy, more specifically shipping and logistics, is that it has excellent international transport links – it is surrounded by water and so has many vital ports and can easily transport goods by sea and has multiple huge airports. London alone has four major airports – London City, Heathrow, Gatwick and Luton, and others are dotted across the country, such as Birmingham Airport and Manchester Airport. As a result, in 2020, the United Kingdom actually ran at a trade surplus of £4.3 billion. The graph below depicts previous data for UK trade of goods and services and the balance, whether it be deficit or surplus, over the years:

As can be inferred from the graph, the UK’s trade balance trend has usually been negative, which can be interpreted as a trade deficit. However, this figure never dips below -£10 billion, meaning the deficit is not significant or concerning. However, in recent years, more precisely twice (late 2019 and early 2020), fluctuations in the trade balance meant that it quickly rose before falling again after a few months. It can again be seen in the graph that the cause of this was not a jump in the export of services, as although it has been gradually increasing over time, this growth has been constant, and it has not seen any significant fluctuations such as this one. Instead, there was a reduction in the trade deficit of goods in both cases, implying that the UK imported fewer goods. The cause of this could either be a lack of consumer demand, which may be the case for late 2019, but in early 2020 it is most likely to be shortages in the goods usually imported and disruptions in the supply chain due to the coronavirus pandemic, which had already broken out but only caused a major lockdown in the UK in March 2020, which is around the same time that this reduction in the trade deficit in goods can be observed.


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