UK Economy (OCR GCSE Geography B)

Economic Changes

• The UK has been in a post-industrial stage since the 1970s and was the first country to experience the Industrial Revolution

• A country's industrial structure is the percentage of people performing economic activities 

• An economic activity is the producing, buying or selling of goods and services

• Economic activities can be grouped into four 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

UK employment sectors 2020

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

• The changes can be divided into 3 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 service-based tertiary sector and quaternary sectors of research and ICT

Clarke-Fisher model

Reading the model

• In the pre-industrial era, the majority (70%) of people were employed within the primary industry and lived in rural areas

• By the 1850s jobs in primary economic activities were rapidly declining reaching 15% in 1900

• In 1900 most people (over 60%) worked in secondary economic activities with tertiary economic activities steadily increasing

• By the 1950s tertiary economic activities overtook secondary economic activities as the main employment sector

• From the 1970s onwards there has been a steady rise in the quaternary sector of research and development (R&D) in the UK

• By the turn of the century, over 70% of people in the UK were employed in tertiary economic activities

Cause of economic change in the UK

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

  • De-industrialisation 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 developing countries where labour costs are cheaper, longer working hours and trade unions have no influence

    • Mechanisation reduced production costs and the need for manual labour 

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

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

    • The 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

• Government policy changes:

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

  • In 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

• Changes at work

  • Not only has there been a shift from primary to tertiary work but also:

    • Increase in female workers

    • Paid holidays and maximum working hours

      • Guaranteed holidays and time off 

      • Working hours reduced from 48 hours a week to 40 hours or less

    • Increased self-employment opportunities

    • Flexible working patterns:

      • Part-time work and career breaks to fit in family responsibilities or other jogs

      • Paternity leave

      • Flexi-time: start and finish earlier or later

      • Job sharing between two or three people

      • Sub-contracting

      • Homeworking

Economic Hubs

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

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

• More people are employed in the UK than ever before: the UK services sector has grown rapidly since the 1970s, and contributes over 85% of the UK’s GDP 

• There is greater variety and opportunities for people: over 1.3 million people work in the IT sector and the UK is one of the world’s leading digital economies

• Improvements in research and development (R&D): this sector employs over 100,000 highly qualified people and contributes over £13bn to the UK economy e.g. British Antarctic Survey employs over 500 skilled and professional staff from several areas of expertise in Cambridge, Antarctica and the Arctic

• The growth of science parks near universities, allows companies to tap into recent graduates of scientific and technical knowledge. Science parks:

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

  • Employ over 120,000 people in over 130 UK science parks 

• Business parks have clusters of businesses and are 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

• Despite this growth, there is still unemployment, with the highest levels being found in regions that once relied on heavy industry and manufacturing

  • Shipbuilding and dockyards - Glasgow, Liverpool, Belfast and Sunderland

  • Steel and coal - South Wales, Sheffield and Birmingham

  • Pottery - Stoke-on-Trent

  • Cotton, wool and silk weaving - Liverpool, Manchester, East Anglia and Macclesfield 

 North-south divide

• The divide reflects the political, regional, and economic gap between the north and south of England

• Policies such as aggressive deindustrialisation, privatisation, and the Housing Act, widened the gap between these regions

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

Economic hubs can 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 city councils across the country

• By setting up economic hubs, information is shared and costs reduced, particularly if established in the declining regions

• Money settles in two areas:

  • High growth cities where the demographics is young and educated, has the potential to grow and has available land for homes and offices (Manchester and Liverpool)

  • Dynamic growth cities, where areas have a higher knowledge base growth, links to highly skilled, educated workforce with good transport connections such as air, rail, sea and road (Southampton and Cambridge)

• Growth corridors have emerged to link some of the main economic hubs and connect areas across the UK

  • They traditionally extend beyond city boundaries and use major transport routes

  • This makes access to other hubs easier and reduces the costs involved in building separate hubs

    • The M4 corridor links hi-tech industries from Swansea in South Wales to London and beyond

• HS2 high speed rail

  • Aims to connect London to Birmingham. Originally it was intended to extend to Leeds, Sheffield and Manchester, this has now been cancelled due to the increasing costs

  • 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

• Other hubs include:

  • Humber local enterprise partnerships (LEPs):

  • By 2019 it had supported over 13,000 businesses and created nearly 6000 new jobs 

  • It invested in infrastructure improvements and flood alleviation schemes

  • It helped extend superfast broadband to 97% of the region

  • Ensures businesses stay in the future in an economically deprived 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

  • Devolving powers and budgets directly to northern mayors to use the money on schemes they feel will best benefit the local community: schemes such as the Transforming Cities Fund to promote business growth that creates and sustains local employment

• 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

• Belfast Titanic Quarter

  • Based along the Maritime Mile, the quarter is one of Europe’s largest economic hubs

  • It houses TV and film production studios, has the world’s largest Titanic visitor attraction and one of Belfast’s most desirable residential waterfront developments

  • It has over 100 national and international businesses within the quarter

• Bristol - creative and digital industries, along with law and finance

• Salford has focused on the media industry with the BBC and ITV siting their main studios there

• Aberdeen is the centre for North Sea oil and gas, along with developing a research and development hub

• Silicon Glen in Scotland focuses on electronics and software technologies

• Silicon Fen in association with Cambridge University has one of the top hi-tech research facilities 

Case Study - Cambridge

• Cambridge is one of the most important major economic hubs in the UK and is often referred to as Silicon Fen

• Located in the southeast of England, 56 miles northeast of London, along the M11 growth corridor, it is home to one of the world’s oldest, top universities

• With over 20,000 biotech and IT companies based there, its economy is set to grow by £170m making it the fastest-growing city in the country

• Furthermore, the businesses generate a combined revenue of £30bn, making Cambridge a net contributor to the UK economy directly

• Due to its links with the university, a number of companies have grown to become market leaders and there are some 12 billionaires among its alumni, more than any other university outside the US

• World leaders in semiconductors, wireless and display tech, sensors, mobile communications and scientific instrumentation

• Some of its graduate success stories include:

  • Concorde’s “drooped nose cone'

  • Clear Blue pregnancy test

  • Bluetooth was put on a chip;

  • Wonderbra Ultimate Strapless bra 

• Cambridge is also home to world-leading research centres such as the MRC Laboratory for Molecular Biology, the Babraham Institute for Immunology Research, and the Wellcome Trust Sanger Institute for Genomic Research

• In 2018, the Papworth Hospital opened on the Biomedical Campus, uniting the internationally-recognised heart and lung treatment to other world-leading healthcare organisations

• Cambridge attracts over 4 million tourists each year and has one of the most resilient economies in the country

• Cambridge workers are rated the most highly skilled in the country with an average salary of £ 40,000 a year making it one of the highest in the country

• Unemployment remains lower than 3 per cent and there are fewer people on benefits than elsewhere in the UK

North West Development

• Cambridge has been home to several well-established engineering firms, such as the Cambridge Scientific Instrument Company, the Pye Group, and Marshall of Cambridge, however, it was still viewed by many as a small country town in the centre of a very large natural green belt

• But its national and global importance grew with the development of the Cambridge Cluster in the 1960s, where the university was quick to step in and help academics commercialise their ideas and back their companies by developing Trinity College's Cambridge Science Park in 1970, whereby 1990, company formations had reached an average of two per week

• Recently, the university has been working on the single biggest investment by any university in the UK by investing £1bn in a research facility, which will include 3,000 new homes, space for 2,000 post-graduate students, new schools, a nursery, shops and surgeries

• Together with another £1bn from the Government, the city will further develop a new railway station, houses and roads - making Cambridge a recipient of more money than any city since the Victorian age