Economic Futures in the UK (AQA GCSE Geography): Revision Note

Causes of economic change

• Industrial structure refers to the percentage of employment in the primary, secondary, tertiary and quaternary sectors of the industry within an economy

• An economic activity is the production, purchase or selling of goods and services

• We can divide economic activities into four distinct sectors:

  • Primary: mining, fishing, farming, etc.

  • Secondary: factory workers, clothing, steel production, etc.

  • Tertiary: nurses, lawyers, teachers, shop assistants, chefs

  • Quaternary: hi-tech scientists, research and development

• The UK’s economy has changed over time and place and the most significant changes came during the industrial revolution between 1750-1900

• The changes can be divided into three stages:

  • Pre-industrial stage: most people worked in the primary sector, such as farming or mining

  • Industrial stage: more people moved into the secondary sector of manufacturing

  • Post-industrial stage: emphasis is on the service-based tertiary sector and quaternary sectors of research and ICT

• There are 3 main causes of economic change in the UK:

De-industrialisation

• This saw the decline in the UK's traditional manufacturing industries and growth in the tertiary and quaternary sectors due to:

  • Global shift of manufacturing to NEEs where labour costs are cheaper, there are longer working hours and trade unions have no influence

  • Mechanisation reduced production costs and the need for manual labour 

Globalisation

• Globalisation and increased world trade with cheaper imported goods contribute further to a decline in manufacturing

  • Markets have become deregulated and companies have to find ways to make a profit through change and innovation

  • Service sector has grown and wages increased

  • Taxes are kept low, giving people more disposable incomes; mortgages become easier to obtain and house prices increase

  • However, the global financial crisis of 2008 hit, causing the UK to enter a period of recession

  • Many UK banks were bailed out using government money and the national debt grew

  • Government policy forced changes on banks and how they lent money in the future

Government policy changes

• 1945 -1979 state-run industries were created after WWII to boost the economy, with the government supporting many unprofitable industries

• 1973 the UK joined the European Union (called the 'common market' at that time)

• 1979 - 2010 with political change came privatisation and many of the state-run businesses were either sold or closed down and this is when UK jobs first began to go overseas

• 2010 - 2016 a ‘rebalancing’ of the economy through austerity measures, inward investments and improvements to infrastructure

• 2016 onwards – Brexit, although it is unknown at present what the full impact of the UK's decision to pull out of the EU will be, although Nissan announced:

Post-industrial economy

• A post-industrial economy is where the manufacturing industry declines and is replaced by growth in the service and quaternary sectors

• By 2021, 80% of UK employment was in the tertiary and quaternary sectors, with only 18% in manufacturing and 2% in primary employment

  • By contrast, in 1900, the manufacturing figure was 55%

• Development of information technology: over 1.3 million people work in the IT sector and the UK is one of the world’s leading digital economies

• Service industries: the UK services sector has grown rapidly since the 1970s and contributes over 85% of the UK’s GDP

• Finance: UK is the world’s leading centre for financial services and accounts for about 10% of the UK’s GDP

• Research and development (R&D): this sector employs over 100,000 highly qualified people and contributes over £13bn to the UK economy

  • The British Antarctic Survey employs over 500 skilled and professional staff from several areas of expertise in Cambridge, Antarctica and the Arctic

• Science parks: Tap into research and employ recent graduates with scientific and technical knowledge

  • They are usually based on a single site and linked to a university, allowing the use of research facilities

  • There are over 130 UK science parks that employ over 120,000 people

• Business parks: Areas of land occupied by a cluster of businesses

  • Usually located on the urban fringes where land is cheaper and readily available with less congestion

  • Businesses can benefit from collaboration; e.g., printing companies can provide materials for other businesses in the park

Impacts of industry

• Impacts in the UK include:

  • Landscapes scarred by ugly derelict buildings

  • Gas and soot emissions from burning coal polluted the air, resulting in smog

  • Landscapes in coal mining areas were transformed by ugly spoil heaps

  • Industrial waste products can cause air, water and soil pollution

  • The transport of raw materials and manufacturing products increases levels of air pollution

• Car industry:

  • Each year the UK car industry manufactures around 1 million cars

  • Most of these are produced at 7 large plants owned by Nissan, Honda and BMW

  • Car manufacturing has not been very environmentally sustainable

  • Inefficient engines produced harmful pollutants as they burned fuel

  • Materials used to make cars were often toxic and difficult to recycle

  • Car production processes are energy intensive

Case study: Nissan, Sunderland

• Nissan car plant in Sunderland opened in 1986 and employs 6,700 people

• It supports a further 27,000 UK automotive supply chain jobs, of which 75% are in North East England

• Restrictions on exhaust emissions mean that cars are now designed to more efficient and cleaner

• Currently the Sunderland car plant produces the Nissan Qashqai and the electric Nissan Leaf 

• The materials used are now readily recycled and reduce landfill waste

• In 2005 Nissan installed its first wind turbines on site and a solar farm in 2016, and Nissan hopes to extend this further by 2023

• According to Nissan:

Social & economic change in rural areas

• Rural areas in the UK are undergoing change

• Areas such as the Outer Hebrides of Scotland are seeing their population decline as people move away to seek jobs elsewhere

• Areas close to thriving cities and towns (London, Oxford and Cambridge) are experiencing population growth

• This leads to significant social and economic changes

Population decline: Outer Hebrides

Changes

• Limited employment – young people move away

• Population declined by more than 50% since 1901

Economic effects

• Services closing: Farms can only provide small amount of work

• Tourism increased: But not enough infrastructure

Social effects

• Ageing population with too few younger generations to look after them

• Expected fall in children = schools closing

Population growth: South Cambridgeshire

Changes

• Ageing (65+) population increasing

• Population of 150,000 increasing due to inward-migration: most come from Cambridge and Eastern Europe

Economic effects

• Expensive houses: Pressure on services

• Reduction in farming employment: Farmers diversifying or selling land for houses

Social effects

• 80% car ownership: Increased traffic congestion and pollution

• Housing developments: Lack community spirit and many young people cannot afford house prices

Improvements in transport infrastructure

• Transport and industry are linked, as industries need good transport networks to move goods and services and jobs are created with ongoing investments and improvements

• Industries are 'pulled' to areas with good transport networks which attract employment

• Remote and/or poorly connected areas struggle to attract industry and have higher levels of unemployment

Roads

• The 2014 Road Investment Strategy’ includes:

  • 100 new road schemes by 2020

  • 1300 new lane miles added to motorways and major roads

• Extra lanes added to turn main motorways into ‘smart motorways’

  • Traffic flow can be controlled remotely, which helps reduce congestion by using the hard shoulder

• These schemes will create jobs and boost local economies

  • Example: south-west superhighway – £2 billion road widening project on A303 between Basingstoke (M3) and Exeter (M5)

• Hundreds of construction jobs will be created, which will boost local economies across the UK and reduce congestion

Railways

• Development of the UK’s railways aims to ease congestion and stimulate economic growth, especially in northern England

• Planned improvements include:

  • Electrification of the Trans-Pennine Railway to improve connections between major cities in Northern England and reduce journey times

  • London Crossrail project involved 32 km of new line beneath central London, which improved the east-west connections and reduced commuter times

  • High Speed 2 (HS2) is a highly controversial route

    • It aims to cut through the countryside and near settlements

    • It involves the construction of a high-speed rail line from London to Birmingham and then onto Manchester, Leeds, and Sheffield

    • This project is delayed at present due to costs and disputes

Ports

• The UK has always been a trading nation and its port industry is the largest in Europe

  • 95% of the UK's imports and exports enter and leave via a port

  • Roughly 32 million passengers travel through UK ports each year

• The UK's largest ports are run by private companies which have invested heavily in the port infrastructure

  • Ports employ around 120,000 people

  • Example: Liverpool 2 project doubled container capacity to over 1.5 million a year by constructing a deep-water quay on the River Mersey

  • Opened in 2016 it created 1000s of jobs, boosted the regional economy, and reduced freight traffic on the roads

Airports

• Airports creates vital global links

• They account for 3.4% (£53.3 bn) of the UK’s GDP and are extremely important to the UK economy

  • 373.2 million tonnes of freight pass through UK airports every year

  • UK airports handled 750,000 flight departures and 200 million passengers annually

• Boosts economic growth regionally and nationally

  • Provide 1000s of direct and indirect jobs

  • Example: Heathrow expansion – proposed new 3rd runway will cost £18.6 billion

  • It is predicted to create new jobs

  • However, there are concerns regarding increased noise and pollution

UK north-south divide

• The North-South Divide refers to the political, regional, and economical gap between the North and the South of England

• The divide highlights the disparities in wealth between the North and South of the UK that stretches across from the Severn in Gloucestershire to Wash Bay in Norfolk

• Long before the government policies of the 1980s, the UK has looked at the North as its poorer relative 

• Policies such as aggressive deindustrialisation, privatisation, and the Housing Act all widened the gap between the North and the South of England

• These policies caused unemployment, strikes, and rising costs for people who lived in or identified as part of the North

• The North of England was generally an area of Labour politics, traditional manufacturing industries (shipbuilding, mining, steel production, which are often based on raw materials such as coal), and a reliance on public services

• The South is a region of Conservative politics, private enterprise, offices, and particularly financial services, with London as the dominant centre, which has increased income and the value of property in the south

Strategies to close the gap

• For several decades, the UK government (along with funding from the EU) has attempted to restore some balance through investment and devolution, which gives additional power and money to councils in the north

Local enterprise partnerships (LEPs)

• LEPs are voluntary partnerships between local authorities and businesses

• By identifying local needs, companies are encouraged to invest in order to boost the local economy and create jobs

  • By 2019, the Humber LEP supported over 13,000 businesses and created nearly 6,000 new jobs.

  • It invested in improving infrastructure and reducing flooding

  • It extended superfast broadband to 97% of the region

  • Helps businesses thrive in an economically challenged area

Enterprise Zones (EZs)

• These areas encourage new businesses and jobs in areas with a low amount of pre-existing economic activity

• There are 48 EZs across England, of which 25 are in the 'north' 

• The government supports businesses in EZs by:

  • Providing a business rate discount on rent and taxes

  • Ensures the provision of superfast broadband

  • Grants for machinery

  • Creates simpler planning regulations to encourage development and further expansion

The Northern Powerhouse Strategy

• Improving the local economy by investing in skills, innovation, transport and culture

• Powers and budgets will be devolved directly to northern mayors, allowing them to allocate the funds to schemes they believe will most effectively benefit the local community. Schemes such as the Transforming Cities Fund to promote business growth and thus create and sustain local employment

  • The Northern Spire Bridge crosses the River Wear in Sunderland

  • It cost £117.6 million and was the first road bridge in over 40 years to connect Castletown to the north and Pallion to the south

  • The project developed and regenerated the neglected south bank of the river

  • It provided a transport link that crossed the River Wear, connecting the Port of Sunderland and Sunderland city centre to the IAMP Enterprise Zone and the wider Tyne and Wear city region

HS2 high-speed rail

• Aims to connect London to Birmingham and eventually Leeds, Sheffield and Manchester

• Will help in reducing travel time and thereby improving business links, reducing the need for businesses to be based in London

• This will bring economic benefits to the north that has suffered the most from de-industrialisation

Liverpool 2

• A new port to double the port’s capacity, which will create thousands of jobs in the northwest

• Boost the regional economy with direct and indirect jobs

• Which will support businesses in an area that has experienced severe job losses

The UK in the wider world

Background

• The UK was once one of the world’s most powerful political and trading nations

• At its height, the British Empire covered about a third of the world’s land area with colonies in Africa, Asia-Pacific and the Americas

• Between the 1960s and 1980s, many former colonial countries gained independence and the UK became a member of the Commonwealth then left the EU in 2020

• Today the UK continues to have political, economic and cultural influence with groups such as G8, NATO and the UN Security Council

• It remains one of the world’s major economies and is a global transport and financial hub

• The UK is also highly regarded for its fairness and tolerance, its highly developed legal system, its strong democratic principles and its rich cultural heritage

Connections

Trade

• The UK trades with many countries by sea, air, road and rail

• The UK’s main trading partners are the EU (particularly Germany, France and the Netherlands)

• USA: important historic trading partner

• Recent increases of trade with China

• Post-Brexit, the UK is likely to develop stronger links with countries outside the EU (e.g. India, China and the USA)

Transport

• The UK’s long trading heritage has resulted in the development of major ports and airports such as Heathrow and Gatwick

• London Heathrow is one of the busiest airports in the world

• There are important transport links between the UK and mainland Europe, i.e., the Channel Tunnel 

• Ferries and cruise ships transport people to Europe and the rest of the world from ports such as Southampton and Dover

Electronic communication

• The internet is increasingly important in the financial and creative sectors

• 99% of internet traffic passes along network of high-powered submarine cables

• Connections are concentrated between UK and USA

• A project known as Arctic Fibre is due to connect London and Tokyo and involves 15,000km of cables

Culture

• Global importance of English Language has given the UK strong cultural links with many parts of the world

• Cultural links include art, fashion, music, television and film

• TV is one of the UK’s major creative industries, worth £1.25 billion a year, with programmes such as Doctor Who, Downton Abbey, Peppa Pig and Sherlock being successful exports

• Migrants have brought their own culture to the UK, such as films, fashion, food and festivals

UK’s links with the EU

• EU has 28 member countries

• It is an important trading group, but its powers also include political influence

• Many in UK feel that EU is too influential in making laws which affect the UK

• In 2016, UK voted to leave the EU (Brexit) and left on 31 January 2020 

• While the UK was still a member state of the EU, it benefited from the following: 

  • Financial support for farmers and disadvantaged regions in UK

  • Goods, services, capital and labour can move freely between member states and encourage trade

  • Hundreds of thousands of people from the poorer countries of Eastern Europe entered the UK in search of higher wages

  • There are EU laws and controls on crime, pollution and consumer rights

  • The European Structural Fund supported regional developments in the UK

UK link to the Commonwealth

• The UK maintains strong political and economic links with its former colonies through the Commonwealth

• The Commonwealth is a voluntary organisation comprising of over 50 countries

• The Commonwealth Secretariat provides advice and support to member countries on a range of issues, including human rights and social and economic development

• The heads of each country meet every two years to discuss issues of concern and work together to promote sustainable development

• There are important trading and cultural links

• There are also sporting connections, such as the Commonwealth Games