page_title: Economy of the United Kingdom
section_title: Government spending and economic management
hierarchical_section_title: Economy of the United Kingdom / Government spending and economic management
caption_attribution_description: English: Chart showing the United Kingdom's interest rate, 1800 to 2016. Data from 'Interest rate changes since 1694' by The Guardian and 'Official Bank Rate history' by the Bank of England.
context_page_description: The economy of the United Kingdom is a highly developed social market and market-orientated economy. It is the sixth-largest national economy in the world measured by nominal gross domestic product, ninth-largest by purchasing power parity, and twenty second-largest by GDP per capita, comprising 3.3% of world GDP.
  In 2016, the UK was the tenth-largest goods exporter in the world and the fifth-largest goods importer. It also had the second-largest inward foreign direct investment, and the third-largest outward foreign direct investment. The UK is one of the most globalised economies, and it is composed of England, Scotland, Wales and Northern Ireland.
  With more than 52% of its imports and its exports, the European Union, including its 27 members states, remains in 2020 one notable trade partner from the UK.
  The service sector dominates, contributing around 80% of GDP; the financial services industry is particularly important, and London is the second-largest financial centre in the world. Edinburgh is ranked 17th in the world, and 6th in Europe for its financial services industry in 2020. Britain's aerospace industry is the second-largest national aerospace industry.
context_section_description: Government involvement in the economy is primarily exercised by HM Treasury, headed by the Chancellor of the Exchequer. In recent years, the UK economy has been managed in accordance with principles of market liberalisation and low taxation and regulation. Since 1997, the Bank of England's Monetary Policy Committee, headed by the Governor of the Bank of England, has been responsible for setting interest rates at the level necessary to achieve the overall inflation target for the economy that is set by the Chancellor each year. The Scottish Government, subject to the approval of the Scottish Parliament, has the power to vary the basic rate of income tax payable in Scotland by plus or minus 3 pence in the pound, though this power has not yet been exercised.
  In the 20-year period from 1986/87 to 2006/07 government spending in the UK averaged around 40% of GDP. In July 2007, the UK had government debt at 35.5% of GDP. As a result of the 2007–2010 financial crisis and the late-2000s global recession, government spending increased to a historically high level of 48% of GDP in 2009–10, partly as a result of the cost of a series of bank bailouts. In terms of net government debt as a percentage of GDP, at the end of June 2014 public sector net debt excluding financial sector interventions was £1304.6 billion, equivalent to 77.3% of GDP. For the financial year of 2013–2014 public sector net borrowing was £93.7 billion. This was £13.0 billion higher than in the financial year of 2012–2013.
caption: UK interest rate from 1800 to 2020
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