Economic geography of the United Kingdom
The economic geography of the United Kingdom reflects its high position in the current economic league tables, as well as reflecting its long history as a trading nation and as an imperial power. This in turn was built on exploitation of natural resources such as iron ore. Much has changed since Bevan's speech in 1945, with the coalfields deserted and the Empire relinquished. With its dominant position gone, the UK economic geography is shaped by the one constant: it is a trading nation; the UK has been self-sufficient in terms of food supply and its modern pattern of agriculture reflects a combination of history, current public policy and comparative advantage. Since the Enclosure Acts of the eighteenth century, the UK's uplands have been associated with animal husbandry and forestry. However, by the time of the Enclosure Acts, most of lowland Britain was enclosed by processes such as assarting or illegal, but tolerated, piecemeal enclosure. However, evidence of the former open field system of agriculture can still be seen in some parts of the landscape, such as in the indentations remaining from boundary ditches of the former farming strips.
Enclosure, in turn, led to intensification. Most UK agriculture is intensive and mechanised, with the use of chemical fertilisers and insecticides routine. By European standards it is efficient, although that does not make it profitable; this intense nature was compounded in the post-War years, with fields being expanded at the expense of hedgerows. This process has been criticised for damaging biodiversity. East Anglia and South East England have been centres for grain production, with some areas of South East England specialising in market gardening; the county of Kent was so well known for this that it is referred to as the Garden of England and was noted for hop growing. Dairy farming is most prevalent in South West England; the detailed pattern of modern UK agriculture is influenced by the Common Agricultural Policy of the European Union, with a combination of price support and set-aside policy. Around the edges of south eastern towns good agricultural land remains uncultivated as a result of price distortions created by the Metropolitan Green Belt.
Indeed, since around 2001 speculators have been buying Green Belt agricultural land adjacent to built up areas, selling it off in plots, persuading buyers that the government will have to weaken Green Belt protection to solve the housing crisis. It is hard to see; the UK's primary industry sector was once dominated by the coal industry concentrated in south Wales, Yorkshire, North East England and southern Scotland. The number of pits and miners have been slashed, output fell by more than 75% between 1981 and 2003; the remaining pits produced 17.2 million tonnes of oil equivalent in 2003, making the UK the 15th largest coal producing nation, compared with 4th in 1981, according to the BP Statistical Review of World Energy 2004. The major primary industry is North Sea oil, its activity is concentrated on the east coast of North East England. The waters in the North Sea off the east coast of Scotland contain nearly half of the UK's remaining oil reserves, a quarter of reserves are located in the North Sea near the Shetland Islands.
As of January 2004, the UK had proven crude oil reserves of 4.7 billion barrels including onshore reserves, according to the Oil and Gas Journal. A related industry is natural gas which, since the 1970s, has supplied all of the UK gas needs, replacing poisonous coal, or town, gas. Most natural gas production is with a small amount onshore and in the Irish Sea; the largest reserves not related to oil production are in the southern North Sea between the UK and the Netherlands, although. The UK is expected to become a net natural gas importer before 2010. At one time or another every product that can be imagined has been made in the UK. In particular its heavy manufacturing drove the industrial revolution, starting with the first blast furnace at Coalbrookdale in Shropshire. A map of the major UK cities gives a good picture of where manufacturing flourished, specialisations could be identified, in particular: Birmingham, London, Newcastle, Sheffield Sunderland Leeds Belfast Cardiff The automotive industry can be traced back to the 1890s, by which time industries such as shipbuilding and steel were established.
In the inter-War years modern industries emerged, with aerospace forming clusters around London, Bristol and in Hertfordshire. The Hertfordshire cluster no longer exists; the early electronics industry preferred the south the home counties. Today there is no heavy manufacturing industry in which UK-based firms can be considered world leaders and no product in which a UK city or region is the world leader. However, the Midlands, in particular, remains a strong manufacturing centre, with around a fifth of employment dependent on manufacturing, the East Midlands Development Agency has a policy to maintaining this characteristic. More high technology firms have concentrated along t
Banking in the United Kingdom
Banking in the United Kingdom can be considered to have started in the Kingdom of England in the 17th century. The first activity in what came to be known as banking was by goldsmiths who, after the dissolution of English monasteries by Henry VIII, began to accumulate significant stocks of gold. Many goldsmiths were associated with The Crown but, following seizure of gold held at the Royal Mint in the Tower of London by Charles I, they extended their services to gentry and aristocracy as the Royal Mint was no longer considered a safe place to keep gold. Goldsmiths came to be known as ‘keepers of running cash’ and they accepted gold in exchange for a receipt as well as accepting written instructions to pay back to third parties; this instruction was the forerunner to the modern cheque. Around 1650, a cloth merchant, Thomas Smith opened the first provincial bank in Nottingham. During 1694 the Bank of England was founded; the Governor and Company of the Bank of Scotland was established by an Act of the Parliament of Scotland on 17 July 1695, the Act for erecting a Bank in Scotland, opening for business in February 1696.
Although established soon after the Bank of England, the Bank of Scotland was a different institution. Where the Bank of England was established to finance defence spending by the English government, the Bank of Scotland was established by the Scottish government to support Scottish business, was prohibited from lending to the government without parliamentary approval; the founding Act granted the bank a monopoly on public banking in Scotland for 21 years, permitted the bank's directors to raise a nominal capital of £1,200,000 Pound Scots, gave the Proprietors limited liability, in the final clause made all foreign-born Proprietors naturalised Scotsmen "to all Intents and Purposes whatsoever". John Holland, an Englishman, was one of the bank's founders, its first chief accountant was George Watson. During this period, services offered by banks increased. Clearing facilities, security investments and overdraft protections were introduced. An Act of Parliament in 1708 restricted banks with more than six partners from issuing bank notes.
This had the effect of keeping private banks as small partnerships. Joint stock investment companies were well established, but joint stock banks did not become well established until the following century; the Industrial Revolution and growing international trade increased the number of banks in London. These new "merchant banks" facilitated trade growth, profiting from England's emerging dominance in seaborne shipping. Two immigrant families and Baring, established merchant banking firms in London in the late 18th century and came to dominate world banking in the next century. Many merchant banks were established outside London in growing industrial and port cities such as Manchester, Birmingham and Liverpool. By 1784, there were more than 100 provincial banks; the industrialist turned banker such as Fox and Company could assist his own industry since he not only provided a local means of payment, but accepted deposits. Here we have a parallel with the early goldsmith banking. A great impetus to country banking came in 1790 when, with England threatened by war, the Bank of England suspended cash payments.
A handful of Frenchmen landed in Pembrokeshire. Shortly after this incident, Parliament authorised the Bank of England and country bankers to issue notes of low denomination. On 23 October 1826 Lancaster Banking Company, was formed; however earlier that year the Bristol Old bank had converted from a private to a joint stock bank, making it the first joint stock bank. This was followed by other institutions such as the Manchester & Liverpool District Banking Company and the National Provincial Bank; the National Provincial was the first bank to be considered a national bank with twenty branches across England and Wales. In 1844 the government introduced the Bank Charter Act to regulate the issuing of bank notes. Two banking collapses, one in 1866 and another in 1878 caused significant reputation damage but in consequence record keeping and accounting improved; the resulting new organisations became huge bureaucracies with a board of directors, general manager, secretary and an army of accounting clerks.
In 1896 twenty smaller private banks formed a new joint-stock bank. The leading partners of the new bank, named Barclay and Company, were connected by a web of family and religious relationships; the company became known as the Quaker Bank, because this was the family tradition of the founding families. This bank became Barclays PLC. With the outbreak of war banking flourished and the so-called ‘’Big Five’’ commenced a series of takeovers and mergers; these banks, National Provincial, Barclays and Midland were reined in by government control. Between the wars, there was a decline to match the general depression of the time, but the banks fought back by taking action to recruit less wealthy customers and by introducing small saving schemes. It would take until 1950 for real recovery where there was a huge increase in provincial branch offices and the emergence of the high street bank. Relaxation of some controls over mergers and acquisitions led to consolidation in the 1960s in which the Big Five became the Big Four, along with the takeover of several regional banks.
At the same time the government launched the National Girobank. In 1976 the Banking Act increased the supervisory role of the Bank of England. Introduction of computing, credit c
Global financial system
The global financial system is the worldwide framework of legal agreements and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade financing. Since emerging in the late 19th century during the first modern wave of economic globalization, its evolution is marked by the establishment of central banks, multilateral treaties, intergovernmental organizations aimed at improving the transparency and effectiveness of international markets. In the late 1800s, world migration and communication technology facilitated unprecedented growth in international trade and investment. At the onset of World War I, trade contracted as foreign exchange markets became paralyzed by money market illiquidity. Countries sought to defend against external shocks with protectionist policies and trade halted by 1933, worsening the effects of the global Great Depression until a series of reciprocal trade agreements reduced tariffs worldwide.
Efforts to revamp the international monetary system after World War II improved exchange rate stability, fostering record growth in global finance. A series of currency devaluations and oil crises in the 1970s led most countries to float their currencies; the world economy became financially integrated in the 1980s and 1990s due to capital account liberalization and financial deregulation. A series of financial crises in Europe and Latin America followed with contagious effects due to greater exposure to volatile capital flows; the global financial crisis, which originated in the United States in 2007 propagated among other nations and is recognized as the catalyst for the worldwide Great Recession. A market adjustment to Greece's noncompliance with its monetary union in 2009 ignited a sovereign debt crisis among European nations known as the Eurozone crisis. A country's decision to operate an open economy and globalize its financial capital carries monetary implications captured by the balance of payments.
It renders exposure to risks in international finance, such as political deterioration, regulatory changes, foreign exchange controls, legal uncertainties for property rights and investments. Both individuals and groups may participate in the global financial system. Consumers and international businesses undertake consumption and investment. Governments and intergovernmental bodies act as purveyors of international trade, economic development, crisis management. Regulatory bodies establish financial regulations and legal procedures, while independent bodies facilitate industry supervision. Research institutes and other associations analyze data, publish reports and policy briefs, host public discourse on global financial affairs. While the global financial system is edging toward greater stability, governments must deal with differing regional or national needs; some nations are trying to systematically discontinue unconventional monetary policies installed to cultivate recovery, while others are expanding their scope and scale.
Emerging market policymakers face a challenge of precision as they must institute sustainable macroeconomic policies during extraordinary market sensitivity without provoking investors to retreat their capital to stronger markets. Nations' inability to align interests and achieve international consensus on matters such as banking regulation has perpetuated the risk of future global financial catastrophes; the world experienced substantial changes in the late 19th century which created an environment favorable to an increase in and development of international financial centers. Principal among such changes were unprecedented growth in capital flows and the resulting rapid financial center integration, as well as faster communication. Before 1870, London and Paris existed as the world's only prominent financial centers. Soon after and New York grew to become major centres providing financial services for their national economies. An array of smaller international financial centers became important as they found market niches, such as Amsterdam, Brussels and Geneva.
London remained the leading international financial center in the four decades leading up to World War I. The first modern wave of economic globalization began during the period of 1870–1914, marked by transportation expansion, record levels of migration, enhanced communications, trade expansion, growth in capital transfers. During the mid-nineteenth century, the passport system in Europe dissolved as rail transport expanded rapidly. Most countries issuing passports did not require their carry, thus people could travel without them; the standardization of international passports would not arise until 1980 under the guidance of the United Nations' International Civil Aviation Organization. From 1870 to 1915, 36 million Europeans migrated away from Europe. 25 million of these travelers migrated to the United States, while most of the rest reached Canada and Brazil. Europe itself experienced an influx of foreigners from 1860 to 1910, growing from 0.7% of the population to 1.8%. While the absence of meaningful passport requirements allowed for free travel, migration on such an enormous scale would have been prohibitively difficult if not for technological advances in transportation the expansion of railway travel and the dominance of steam-powered boats over traditional sailing ships.
World railway mileage grew from 205,000 kilometers in 1870 to 925,000 kilometers in 1906, while steamboat cargo tonnage surpassed that of sailboats in the 1890s. Advancements such as the telephone and wireless telegraphy revolutionized telecommunication by providing instantaneous communication. In 1866, the first
2008 United Kingdom bank rescue package
A bank rescue package totalling some £500 billion was announced by the British government on 8 October 2008, as a response to the ongoing global financial crisis. After two unsteady weeks at the end of September, the first week of October had seen major falls in the stock market and severe worries about the stability of British banks; the plan aimed to restore market confidence and help stabilise the British banking system, provided for a range of what was claimed to be short-term "loans" from the taxpayer and guarantees of interbank lending, including up to £50 billion of taxpayer "investment" in the banks themselves. In fact some of these loans and investments, via shareholdings, have since been sold back to the market at huge losses to the taxpayer. Subsequently, broadly similar measures were introduced by the United States and the European Union in response to the financial crisis; some commentators noted that, although under the capitalist model inefficient private commercial enterprises should be allowed to go bust, the banks were "too big to fail".
Not a single bank chief or chairman went to prison in the UK or in the US. The announcement came less than 48 hours after Britain's leading share index, the FTSE100, recorded its largest single-day points fall since 1987; the plan provided for several sources of funding to be made available, to an aggregate total of £500 billion in loans and guarantees. Most £200 billion was made available for short term loans through the Bank of England's Special Liquidity Scheme. Secondly, the Government supported British banks in their plan to increase their market capitalisation through the newly formed Bank Recapitalisation Fund, by £25 billion in the first instance with a further £25 billion to be called upon if needed. Thirdly, the Government temporarily underwrote any eligible lending between British banks, giving a loan guarantee of around £250 billion. However, only £400 billion of this was'fresh money', as there was in place a system for short term loans to the value of £100 billion. Alistair Darling, the Chancellor of the Exchequer, told the House of Commons in a statement on 8 October 2008 that the proposals were "designed to restore confidence in the banking system", that the funding would "put the banks on a stronger footing".
Prime Minister Gordon Brown suggested that the government's actions had'led the way' for other nations to follow whilst Shadow Chancellor George Osborne stated that "This is the final chapter of the age of irresponsibility and it’s extraordinary that a government has been driven by events to today's announcement". On the 8 October 2008 there was a strategic and co-ordinated global effort by seven central banks to calm the financial crisis, by cutting interest rates by 0.5%. The banks were all members of the OECD and included The Bank of England, The European Central Bank and the U. S Federal reserve along with central banks in China, Switzerland and Sweden; the British rescue plan differed from the initial United States' $700bn bailout under the Emergency Economic Stabilization Act of 2008, announced on 3 October and entitled the Troubled Asset Relief Program. The £50bn being invested by the UK Government saw them purchasing shares in the banks, whereas the American program was devoted to the U.
S. government purchasing the mortgage backed securities of the American banks which were not able to be sold in the secondary mortgage securities market. The U. S. program required the U. S. government to take an equity interest in financial organisations selling their securities into the TARP but did not address the fundamental solvency problem faced by the banking sector. The UK package tackled both solvency, through the £50bn recapitalisation plan, funding, through the government guarantee for banks' debt issuances and the expansion of the Bank of England's Special Liquidity Scheme. Announced on 14 October, the U. S. subsequently undertook investments in banks through the Capital Purchase Program and the FDIC guaranteed banks' debt through the Temporary Lending Guarantee Program. Through the Bank Recapitalisation Fund, the government bought a combination of ordinary shares and preference shares in affected banks; the amount and proportion of the stake taken in any one bank was negotiated with the individual bank.
Banks that took the rescue packages had restrictions on executive pay and dividends to existing shareholders, as well as a mandate to offer reasonable credit to homeowners and small businesses. The long-term government plan was to offset the cost of this program by receiving dividends from these shares, in the long run, to sell the shares after a market recovery; this plan covered the possibility of underwriting new issues of shares by any participating bank. The plan has been characterised as, in effect, partial nationalisation; the extent to which different banks participated varied according to their needs. HSBC Group issued a statement announcing it was injecting £750 m of capital into the UK bank and therefore has "no plans to utilise the UK government's recapitalisation initiative... the Group remains one of the most capitalised and liquid banks in the world". Standard Chartered declared its support for the scheme but its intention not to participate in the capital injection element. Barclays raised its own new capital from private investors.
The Royal Bank of Scotland Group raised £20 billion from the Bank Recapitalisation Fund, with £5 billion in preference shares and a further £15 billion being issued as ordinary shares. HBOS and Lloyds TSB together raised £17 billion, £8.5 billion in preference shares and a further £8