The Political and Economic Profile of

BACKGROUND INFORMATION

The Political and Economic Profile of

The United Kingdom of Great Britain and Northern Ireland

Political System

The most important fact in understanding the nature of the British political system is the fundamental continuity of that system. There has not been a revolution of the kind experienced by so many other countries and Britain has not been invaded or occupied for almost 1,000 years. This explains why almost uniquely in the world the British have no written constitution. Any change in the political system has been gradual and pragmatic and built on consensus.

To simplify the British political history, it has essentially been a struggle to shift political power and accountability from the all-powerful king to the national parliament that was increasingly representative of ordinary people and accountable to ordinary people. There have been many milestones along this long and troubled road to full democracy.

The key date in this evolution was 1215 when King John was forced to sign the Magna Carta which involved him sharing power with the barons. This is regarded as the first statement of citizen rights in the world.

The so-called Model Parliament was summoned by King Edward I in 1295 and is regarded as the first representative assembly. Unlike the absolute monarchs of other parts of Europe, the King of England required the approval of Parliament to tax his subjects.

The bicameral structure of the British Parliament - Commons and Lords - emerged in 1341 and the two-chamber model of the legislature has served as a model in very many other parliamentary systems.

It was the 19th century when the franchise was seriously extended. The great Reform Act of 1832 extended the vote from 400,000 citizens to 600,000, but this legislation - promoted by the Whigs (forerunners of the Liberals) - was only carried after being opposed three times by the Tories (forerunners of the Conservatives). In 1918 the country achieved a near universal franchise and the last extension of the franchise (to 18-21 year olds) was made in 1970.

Another important feature of the British political history is that three parts of the United Kingdom - Scotland, Wales and Northern Ireland - have a special status and have local administrations with a wide range of responsibilities. However, England - which represents about 84% of the total UK population of around 60 million - does not have a clear and strong sense of regionalism. So the British political system does not have anything equivalent to the federal system of the 50 states in the USA.

Another important characteristic of the British political system is that, since 1973, the UK has been a member of the European Union (EU). Therefore the UK Government and Parliament are limited in some respects because certain areas of policy or decision-making are a matter for the EU which operates through a European Commission appointed by the member governments and a European Parliament elected by the citizens of the member states.

The UK is a constitutional monarchy but the powers of the monarch as a head of state - currently Queen Elizabeth II – are essentially ceremonial. The most important practical power is the choice of the Member of Parliament to form a government, but the monarch invariably follows the convention that this opportunity is granted to the leader of the political party with the most seats in the House of Commons.

The monarch is determined on the hereditary and primogeniture principles, which means that the oldest male child of a monarch is the next in line to the throne. Under the terms of the Act of Settlement of 1701, the monarch and the monarch's spouse cannot be Catholics because the UK monarch is also the Head of the Church of England. These archaic arrangements are currently under review.

In the classical political theory, there is a concept of 'separation of powers', a term coined by the French politician and the enlightenment thinker Montesquieu. The three arms of the state are:

- the executive – the Ministers who run the country and propose new laws;

- the legislature – the elected body that passes new laws;

- the judiciary – the judges and the courts who ensure that everyone obeys the laws.

This is not the case in the UK because all Ministers in the government are members of the legislature, some senior judges sit in the upper house of the parliament and the formal head of the judiciary is a senior minister. This is an illustration of how pragmatic and flexible the British political system is.

Economic Overview

The UK is the 6^th largest economy in the world according to nominal GDP (current prices, US dollars). Presently the UK’s economy encompasses those of its home nations - England, Scotland, Wales and Northern Ireland. The Isle of Man and he Channel Isles are also considered to be part of the British Isles but have offshore banking statuses.

As a member of the EU, the UK is part of a single market, which ensures the free movement of people, goods, services, and capital within member states. Nevertheless, the UK still maintains its own economy and has chosen to continue using the Pound Sterling as its national currency rather than converting to the Euro.

During its heyday as the British Empire, the UK was the largest and most influential economy in the world. As the birthplace of the first Industrial Revolution during the 18^th century, the UK ushered in what economic historians agree to be the most significant event in mankind’s history. The UK was also able to be at the forefront of technological advances during this time, which was a strong economic advantage over any other country in the world. However, as other countries began to catch up technologically wise, UK’s economy was greatly affected by the two World Wars and the breaking up of the British Empire. Although the UK economy has since recovered, it is unlikely to reclaim its former position as the top economic power in the world.

Today, the UK economy faces another struggle to recover from the 2008 financial crisis. Presently, the recovery effort has been sluggish. In 2011 a report by the Organization for Economic Co-operation and Development (OECD) ranked the UK as the slowest growing economy in the G7, with the exception of Japan.

The UK’s current inflation rate ( 2.60 percent in July of 2012) is threatening to sabotage the UK’s government austerity plans to keep interest rates under control. However, the IMF predicts that the UK economy will recover sufficiently enough for inflation rates to hit the government’s target of 2 percent by the end of 2012. In addition, the inflation rate is expected to remain consistent until 2015 at least.

In 2010, The UK had the sixth largest current account balance deficit in the world, behind the US, Spain, Italy, France and Brazil. UK’s austerity plan has been designed to reduce the debt. By 2015, UK’s current account balance deficit is expected to decrease by half.

UK’s GDP (PPP) is also expected to improve over the next three years. By the end of 2015, UK’s GDP (PPP) is expected to reach US$2.608 trillion.

Similarly, UK’s GDP (PPP ) per capita is likely to experience slow but steady growth annually during the same period. In 2015, UK’s GDP (PPP) per capita will be the 22^nd highest in the world, coming in at US$40,545.95.

The UK’s GDP make-up is comprised of agriculture (1.4 percent), industries (22.1 percent) and services (77.1 percent). Despite only contributing 1.4 percent of the UK’s GDP in 2010, agriculture is still considered an important part of the UK’s economy and society as it produces 60 percent of the UK’s food needs. Agriculture in the UK is highly mechanized and efficient, combining advanced technology with modern farming techniques. Agriculture in the UK is also highly subsidized, both by the UK government and the EU’s Common Agricultural Policy.

Industries and manufacturing on the other hand are extremely important if the UK wishes to reduce its trade deficit. The UK is the sixth-largest manufacturer of goods in the world according to the value of its outputs. Within manufacturing, the production of automotive or aerospace equipment is a major contributor to the UK’s industries.

However, despite the historical importance of agriculture and industries, services remain the dominant component of the UK’s economy. Finance and banking are by far the UK’s most important services with London being one of the three major economic “command centers” alongside New York City and Tokyo. Important financial institutions located within London include the London Stock Exchange, the London International Financial Futures and Options Exchange, the London Metal Exchange, Lloyds of London, and the Bank of England.

Tourism is another extremely important service in the UK. With more than 28 million tourist arrivals in 2009, the tourism industry is worth nearly £80 million annually. The 2012 London Olympics are expected to be a boost to the UK’s economy – providing an additional US$2.457 billion to the economy over ten years.

COMPREHENSION

Understanding the reading

2.4.1. Give extensive answers to the questions. Use the following expressions to present your answers:

- It ran through my mind that…

- Beyond the shadow of a doubt…

- To begin with…

- I am afraid I don’t know…

- Frankly speaking, I am in a real predicament…

1. What do you think contributed to the fundamental continuity of the British political system?

2. How did the British political history progress?

3. What are the milestones along the road to full democracy in the UK?

4. What were the reasons for the King of England to require the approval of Parliament to tax his subjects?

5. Why do you think the bicameral structure of the British Parliament proved to be the best two-chamber model for very many parliamentary systems in the world?

6. Why do you think the franchise extension was an apple of discord between the Liberals and the Conservatives for so many years?

7. What are the reasons from your point of view for the fact that the UK’s state structure is based on the regional rather than federal concept?

8. Is there any separation of powers between the EU Government and the UK’s Government?

9. What are the limitations on the UK’s Government’s authority caused by the British EU membership?

10. The British say that the Queen reigns but she doesn’t rule. Comment on this statement.

11. How are the powers separated in the UK’s Government?

12. What are the UK’s current economic ratings in the world?

13. What is the contribution of the British Empire to the world’s economic development?

14. What is the UK’s progress in the struggle to recover from the 2008 financial crisis?

15. How can the UK’s austerity plan eliminate its current account balance deficit which is the sixth largest in the world?

Scanning

PRACTICE

LANGUAGE FOCUS

SKILLS FOCUS

2.5.4. Read the following sentences and guess which of the political or economic terms and concepts given in the box they define:

Politics, European Commission, autonomous region, balance of trade, Economics, franchise, GDP, industries, constitutional monarchy, primogeniture, purchasing power parity – PPP, federalism, austerity, political system, Magna Carta, separation of powers, constitution, boost, a nation’s current account, offshore banking unit, subsidy, national currency.

1. Bad economic conditions in which people do not have much money to spend. ___________________________

2. Something that helps somebody or something to increase or improve. __________

3. They can be classified on the basis of raw materials, size and ownership. ___________________________

4. A complete set of institutions, interest groups (such as political parties, trade unions, lobby groups), the relationships between those institutions and the political norms and rules that govern their functions (constitution, election law). ___________

5. A social science that analyzes the production, distribution and consumption of goods and services. __________________________

6. The art or science of running governmental or state affairs, including behavior within civil governments. _________________________

7. A set of fundamental principles or established precedents according to which a state or other organization is governed. ___________________________

8. A form of government in which a monarch acts as head of state within the parameters of a constitution. ___________________________

9. The Great Charter of the Liberties of England. ______________________

10. The legal right to vote in your country’s elections. ____________________

11. The executive body of the European Union responsible for proposing legislation, implementing decisions, upholding the Union's treaties and day-to-day running of the EU. ________________________________

12. The right, by law or custom, of the firstborn to inherit the entire estate, to the exclusion of younger siblings. __________________________

13. Under this model, the state is divided into branches, each with separate and independent powers and areas of responsibility so that no branch has more power than the other branches. The normal division of branches is into a legislature, an executive, and a judiciary. ____________________________

14. The market value of all officially recognized final goods and services produced within a country in a given period. ____________________________

15. A shell banking branch located in an international financial center. Its activities are not restricted by local monetary authorities or governments, but it is prohibited from accepting domestic deposits. _____________________________

16. The legal tender issued by a nation's central bank or monetary authority which is used for most financial transactions in that country. _______________________

17. One of the two primary components of the balance of payments, the other being capital account. It is the sum of the balance of trade. _____________________

18. An economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to (or on par with) each currency's purchasing power. ____________________________

19. The difference between the monetary value of exports and imports of output in an economy over a certain period. _____________________________

20. Assistance paid to a business or economic sector. Most of them are made by the government to producers or distributed as subventions in an industry to prevent the decline of that industry. ____________________________

21. A political concept in which a group of members are bound together by covenant with a governing representative head. __________________________________

22. An area of a country that has a degree of autonomy, or freedom from an external authority. Typically it is either geographically distinct from the rest of the country or populated by a national minority. _______________________________

 

2.5.5. a) Read the text and fill in the gaps with the suitable items (a-g) given below.

There are eight __ (1) __ criteria used to determine whether an entity is an independent country (also known as a State with a capital "s") or not. A country only needs __ (2) __ one of the eight criteria not to meet the definition of independent country status. Scotland does not meet all eight criteria; it fails on six of the eight criteria.

I. Scotland has __ (3) __ boundaries. Scotland is 78,133 square kilometers in area.

II. Scotland has people who live there __ (4) __. According to the 2001 census, Scotland's population is 5,062,011.

III. Scotland certainly has __ (5) __ and an organized economy; Scotland even has its own GDP (over 62 billion pounds as of 1998). However, Scotland does not regulate foreign or __ (6) __ because the Scottish Parliament is not authorized to do so. The Bank of Scotland does issue money but it prints the British pound on behalf of the central government.

IV. The Scottish Parliament has the power of __ (7) __, such as education.It is able to control education, training, and __ (8) __ (but not social security). However, this power was granted to Scotland by the UK Parliament.

V. Scotland itself has a transportation system but the system is not fully under Scottish control. The Scottish Parliament controls some aspects of transportation, including the Scottish __ (9) __, bus policy and ports and harbors while the UK Parliament controls railways, __ (10) __ and regulation. Again, this power was granted to Scotland by the UK Parliament.

VI. The Scottish Parliament has the ability to control law and home affairs (including most aspects of __ (11) __, the prosecution system and the courts as well as __ (12) __ and fire services. The UK Parliament controls defense and __ (13) __ across the United Kingdom. Again, Scotland's power was granted to Scotland by the UK Parliament.

VII. Scotland has __ (14) __. The United Kingdom Parliament definitely has power over Scotland's territory.

VIII. Scotland does not have __ (15) __ nor does Scotland have its own embassies in other independent countries.

Thus, as you can plainly see, Scotland (nor Wales, nor Northern Ireland, nor England itself) is not an independent country nor is it a State. However, Scotland is most certainly a nation of people living in an internal division of the United Kingdom of Great Britain and Northern Ireland.

 

a) social engineering

b) on an ongoing basis

c) national security

d) transport safety

e) domestic trade

f) road network

g) to fail on

h) sovereignty

i) internationally recognized

j) the police

k) social work

l) accepted

m) external recognition

n) criminal and civil law

o) economic activity

 

b) Fill in the following grid.

 

Use the plan and helpful phrases given in Appendix 1 to profile the UK’s political history, political structure and economy. Surf the Internet, find extra information and base your presentation on it.

Make up a questionnaire to survey the class into their opinions about the UK economy’s sluggish recovery from 2008 crisis. Write a report summarizing the main viewpoints and giving your comments on them.

 

The Case

Case Analysis

1. Summarize the information of the text above. What do you know about other European economies’ rates of economic growth?

2. Use the Internet or other appropriate mass media sources to estimate the economic activity in the UK’s construction and manufacturing, government spending on infrastructure.

3. How can you account for the fact that the UK government unexpectedly had to borrow money in July which is traditionally a good month for tax receipts.

4. Prepare a report on the case considering the information of your research.

 

Role Play

Situation

The UK economy is recovering so slowly because of two major factors. The first relates to the instability arising from the international economy, primarily the Eurozone. The threat here is that nations have become so indebted that default becomes possible. The second derives from the UK government's economic approach. In essence, this is based on the assumptions that:

- large budget deficits should be quickly reduced, thereby securing lower long-term interest rates in order to benefit the economy;

- the private sector is 'crowded out' by a public sector that absorbs too many resources, and therefore cutting the latter will automatically result in a compensatory private sector expansion.

However, these assumptions are problematic. Whilst deficits cannot be allowed to remain uncontrolled, imposing a hard and fast balanced budget rule is dangerous as it prevents quick reactions to economic shocks. Seeking to cut spending when the demand is weak could be fundamentally misguided.

To ignore this is to ignore the lessons learnt by policy mistakes in the 1930s.

Task: Act out a discussion among the British politicians and economists supporting either the Conservative or Labour Parties’ views on the current economic situation in the UK. Decide the following:

1. How important is the role of government in encouraging business and economic development in the UK?

2. What exactly does the UK economy need to speed up its economic growth: private sector growth or public sector reform?

 

Speaker A

You are the Chairman. You open the meeting, chair the discussion of the reasons, problems and consequences of the UK’s sluggish economic recovery. Make your guests share opinions and make conclusions about reasonable solutions.

Make use of the helpful phrases:

- I am well aware of…

- The point is we can’t wait for people to be happy with…

- Anyway it doesn’t matter. What matters is that…

- Although none of us would argue that…

- It is clear that…

You start with mentioning the fact that the UK's economy is set to contract by 0.7% this year, according to the OECD, the club of industrialised nations. You express your deep concern about it because the UK is in danger of suffering a very slow and sluggish recovery, which if it is not corrected quickly, will be potentially damaging in the medium term. The lack of clearly defined objectives remains a major reason to stop political debates between the Conservatives and Labour and find a solution to speed up the economic recovery after the 2008 credit crunch. You express the idea that both the supporters of nationalization and those of privatization must compromise in order to avoid a major argument.

 

Speaker B

Make use of the helpful phrases:

- I am quite sure that….

- The majority of the population…

- A very small percentage of…

- That may be true, but…

- My personal feeling is that…

- Well, I am calling for couple of reasons…

You represent the New British school of Economics. You are an academically-minded person and the political controversy is the least issue you bother about. You are well aware of the subject and you try to explain the economic reasons for the current state of things. You explain why economic growth is important. This issue has always been important to all governments for a number of reasons:

- The rate of growth of output in relation to the at which the population grow, will determine the rate of increase of output per capita and therefore the rate at which the standard of living improves over time.

- Strong economic growth means that the demand for goods and services will increase, offering opportunities for business to grow.

- Strong economic growth will enable governments to increase public spending on the infrastructure.

- Strong economic growth will provide for new jobs.

Among the various factors leading to growth you concentrate on rapid developments in technology, which bring about productivity gains (more output from the same resources). The latter may induce a surge in growth.

 

Speaker C

Make use of the helpful phrases:

- Could you be more specific, please and …

- I am certain of one thing, …

- And another thing,…

- Do you mean to say that …

- There is one more thing I’d like to consider.

You are a politician and the supporter of the Labour. You start with stating that Nationalisation is not just a UK phenomenon. For different reasons and in variety of ways many Western European countries have ‘taken over’ large parts of the energy, transport and communications industry. You put forward the major arguments for nationalization:

- Some goods and services would not be provided if left to the private sector. For example, many of the commuter services around London are uneconomic. Nationalization guarantees the supply of these services at fair prices.

- Typically nationalized industries are capital intensive.

- Nationalization can enable economies of scale to be achieved.

- In the case of ‘natural monopolies’ nationalization avoids the problem of wasteful duplication of resources.

You quote the Labour 2010 Manifesto:

Labour believes we should protect frontline spending on childcare, schools, the NHS and policing, and reform our public services to put people in control. You deeply believe that Labour will strengthen our society by protecting the things people value and demanding rights and responsibilities from all. To secure the recovery you lay the foundations for economic growth: reforming banks, modernizing infrastructure, and as you pay down the deficit, providing the right support to the private sector to build a diverse, high-tech industrial economy. You think that The Tories would threaten recovery with cuts this year, and fail to invest in our economic future.

Speaker D

Make use of the helpful phrases:

- At the same time, however, …

- If you permit me…

- The chart shows that…

- It is clear from the figures that..

You are an economist who expresses criticism of planned economies and the current percentage of the public centre in the UK’s economy. Public sector is now 53% of economy as record 6.09million Britons work for the state. The public sector has ballooned under Labour to make up more than half of the economy. State spending now accounts for 53.4 per cent of gross domestic product (GDP) as compared to 40 per cent when Labour came to power in 1997. Britain's public sector is now bigger than the European Union average of 50.4 per cent, according to the Organisation for Economic Co-operation and Development figures. You state that the nationalised industries had limited scope to raise capital for long term investment and modernisation because they would have to compete with other government spending departments, like education, health and defense. The result was a prolonged period of under-investment in these industries. You admit that throughout the 1980s, most UK's major State owned industries were sold off to the private sector through privatisation. The intention was that, back in the free market, these industries would become more efficient and would be able to modernise by having greater access to the capital markets. Following the banking collapse of 2009, nationalisation was put firmly back on the agenda, if only in terms of the financial system.

 

Speaker E

Make use of the helpful phrases:

- The statistics say that…

- As I see it, …

- The point is that …

- We can hardly ignore it.

You are a politician and support the Conservatives. You agree with the previous speaker and make a point that there is growing criticism that, because these industries were protected from competition, they had become increasingly inefficient. For example, if a particular nationalised industry made operating losses, the government would simply cover those loses with subsidies. Knowing that the taxpayer would come to the rescue meant that the inefficient behaviour could continue. You quote James Cameron, the Prime Minister of the UK’s government:

“A Conservative government will act now on debt to get the economy moving. We will deal with the deficit more quickly than Labour, so that mortgage rates stay lower for longer with the Conservatives." In calling for the role of the state to be scaled back, you seek to establish a philosophical divide with the Government after 13 years of public sector expansion under the Labour. Government, you say, cannot do everything. Because of the poor state of the public finances, a Tory administration would seek to do more with less.

 

Speaker A

Make use of the helpful phrases:

I see. Well, how are the things there now?

- Surely, … is not the only solution available…

- I also feel that…

- I assure you, that…

-Furthermore…

- What exactly do you mean by …?

Chairman: say that historically the UK evolved as a market economy, with the government playing a passive role, allowing the forces of supply and demand to determine what was produced and the prices charged. However, over a period of time the state has intervened to remedy deficiencies of the market economy so that today, alongside a private sector we have an important public sector. In conclusion you say the UK economy needs private sector growth and public sector reform. Close the meeting by thanking all the participants for the discussion of the problem.

 

PRACTICE

Exercise 1

Insert to before the infinitive where required. Translate the sentences into Russian.

1. You needn’t __ say anything, just nod your head and the claim will __ be met.

2. __ succeed a corporation must __ pay stockholders regular dividends.

3. Where would you ___ like to have your statement announced?

4. A number of the problems need ___ be solved before any recovery can ___ be achieved.

5. The Ministry of Works ought __ be able __ consider your offer.

6. They ought __ have asked my advice in order __ avoid this disastrous mistake. They ought __ have.

7. Many different arrangements have __ be made when nations trade with each other.

8. The problem with such a comparison is that most people are not likely __ accept it because it does not agree with their sense of reality.

9. He appeared __ have plenty of money, which was said __ have been gained in Latin America.

10.It was one of the first companies __ open up a new market in Asia.

11.Why not __ go up and give us an opinion about the survey?

12.The view that outside investors take of Britain as a profitable place __ park their money influences decisions about investment.

13. “I cannot but ___ think that we should cancel our agreement with this country.”

Exercise 2

Exercise 3

Join these pairs of sentences, deciding if to use a bare infinitive or - ing.

Exercise 4

Exercise 4

BACKGROUND INFORMATION

The Political and Economic Profile of