The United Kingdom is one of the world's leading trading power and financial center. It is also the third-largest economy in Europe after Germany and France. Services, particularly banking, insurance, and business services, are key drivers of British GDP growth.
However, growth in the UK has been weaker than in other G7 economies since the 2016 referendum on leaving the European Union (Brexit) and even contracted in the second quarter of 2019. The UK's GDP has increased by 1.4% in 2019 as compared to 1.3% in 2018 (IMF). The services sector - which employs more than 80% of the workforce and contributes more than 70% of GDP - grew by just 0.1% in the final quarter of 2019, while the construction sector grew by 0.5%. However, the manufacturing sector saw output fall by 1.1%.
The last three months of 2019 also saw the trade deficit in goods and services. The deficit widened largely because of a shrinking of the surplus in UK trade in services. Even after average growth, the employment rate has reached historic highs. The unemployment rate is estimated to be 3.8% of the working population as per the IMF.
The uncertainty because of Brexit has increased the pressures on economic activity. The depreciation of the pound sterling increased the cost of imports and reduced the margins achieved by businesses.
What this means for international students
The economy of the UK has been affected by the global slowdown. In the manufacturing sector, there was a small increase in the number of companies reporting improved sales and orders. For both services and manufacturing sectors, confidence in turnover and profitability remains low by past standards. However, the number of people working in the UK has risen continuously since 2012. Almost three-quarters of working-age people are in work, and this is the highest rate since records began in 1971.
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