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Manufacturing, construction and services
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About 250 British industrial companies each have an annual turnover of over Ј500 million. Annual turnover of the biggest company , British Petroleum (BP), makes it the l1th largest industrial group in the world and the second largest in Europe. Five British firms are among the top 20 EU companies in terms of capital employed.
Small businesses, though, are making an increasing contribution to the economy. Between 1980 and 1993 the number of businesses, a large majority of them small firms, rose from 2.4 million to 3.6 million. Companies with fewer than 100 employees account for 50 per cent of the private sector workforce and 30 per cent of turnover. About 97 per cent of firms employ fewer than 20 people.
Manufacturing still has an important role in the economy. Britain excels in high-technology industries, such as pharmaceuticals, electronics , aerospace and offshore equipment, where British companies are among the world's largest and most successful. A selection of some of the major industries is described in this section.
Chemicals and Related Products
Britain's chemical industry is the third largest in Europe. Over half of its output is exported. Exports in 1994 were worth Ј18,700 million, compared with imports of Ј 14,500 million. Traditionally, Britain has been a major producer of basic industrial chemicals, such as basic organic and inorganic chemicals, plastics and fertilisers. In recent years the most rapid growth has been in specialised chemicals, pharma ceuticals and cosmetics. ICI is the sixth largest chemical company in the world and the world's largest paint manufacturer.
Britain's pharmaceutical industry is the world's fourth biggest exporter of medicines, accounting for around 12 per cent of the world market. Glaxo Wellcome became the largest pharmaceutical company in the world when Glaxo took over Wellcome in 1995. British firms have discovered and developed 13 of the world's 50 best-selling drugs, including Glaxo Wellcome's ulcer treatment Zantac and Zeneca's beta-blocker Tenormin. Other major developments pioneered in Britain are semi-synthetic penicillins and cephalosporins (both powerful antibiotics ) and new treatments for asthma, arthritis, migraine and coronary heart disease.
The British biotechnology industry is second only in pre-eminence to that of the United States. Biotechnology has enabled companies to manufacture products using genetic modification. Britain has made major advances in the development of drugs such as human insulin and interferons, genetically-engineered vaccines, the production of antibiotics by fermentation, agricultural products, such as infection-resistant crops, and medical diagnostic devices.
Machine-building is an area where British firms excel, especially in construction and earth-moving equipment, wheeled tractors, internal combustion engines, textile machinery, medical equipment, fork-lift trucks, pumps and compressors. Britain is one of the world's major producers of tractors, which account for around three-quarters of the output of agricultural equipment. It is the world's eighth largest producer of machine tools.
Britain has the fourth largest electronics industry in the world. Products include computers, communications equipment and a large range of components.
As well as an extensive range of computer hardware systems and associated equipment, British firms devise computer applications software and are particularly strong in specialist markets, such as artificial intelligence, computer-aided design, mathematical software, geographical information systems and data visualisation. Major advances are being made by British firms and academic institutions in the field of 'virtual reality', a three-dimensional computer simulation technique with a host of industrial and other applications.
Overseas-owned car companies are responsible for most car production in Britain. These, however, provide work for many indigenous component firms; this sector consists of nearly 4,000 companies.
Car production has recovered strongly following the recession. In 1994 nearly 1.5 million cars were manufactured, the highest number for 20 years – 619,000 cars were exported. Car output is dominated by Rover, Ford, Vauxhall, Peugeot-Talbot and three Japanese companies – Nissan, Toyota and Honda. The latter have invested heavily and introduced new management techniques and production methods.
Britain's aerospace industry is the third largest in the Western world. Sales amounted to Ј12,000 million in 1994 with exports contributing Ј7,500 million.
As the leading British exporter of manufactured goods, British Aerospace (BAe) produces both civil and military aircraft, as well as guided weapons and components. The company has a 20 per cent share in Airbus Industrie, which manufactures a family of
Airbus airliners for which BAe designs and supplies the wings. BAe is one of the world's top defence companies. Military aircraft include the vertical/short take-off and landing Harrier and the Hawk fast jet trainer. It is also a partner in multinational projects, including the Tornado combat aircraft and the Euro-fighter 2000, which had its maiden flight in 1994.
Among other manufacturers are Short Brothers of Belfast and Westland Helicopters. Over 1,()()() West-land helicopters are in service in 19 countries.
Rolls-Royce is one of the world's three prime manufacturers of aero-engines. Over 50,000 Rolls-Royce engines are in service with more than 300 airlines in over 100 countries. Its latest large engine, the Trent, powers the new generation of wide-body twin-engined airliners , such as the Boeing 777 and the Airbus A330.
Around one-third of the aerospace industry consists of aviation equipment. British firms have made significant technological advances in areas such as flight-deck controls and information displays, flight simulators and ejection seats. GEC-Marconi is the world's largest manufacturer of head-up displays.
The largest British space company is Matra Marconi Space UK which, with its French partner, is one of the world's leading space companies. The industry is strong in communications satellites and associated Earth stations and ground infrastructure equipment, and in the area of Earth observation.
Food and Drink
Britain has a large food and drink manufacturing industry, which has accounted for a growing proportion of total domestic food supply. Frozen and convenience foods, yoghurts, dairy desserts and instant snacks are some of the fastest-growing sectors of the food market. Soft drinks, with an annual turnover of Ј6,000 million, is (lie fastest growing sector of the grocery trade, and many innovative products are being introduced.
Scotch whisky is one of Britain's top export earners. There are 110 distilleries in Scotland.
Other manufacturing industries include mineral and metal products, shipbuilding and marine engineering, tobacco, textiles and clothing, and paper, printing and publishing. British Steel is the fourth largest steel company in the world, producing about three-quarters of Britain's crude steel in 1994. In addition to its output of non-ferrous metals and their alloys, such as aluminium and copper, Britain is also a major producer of specialised alloys for the aerospace, electronic, petrochemical, nuclear and other fuel industries. It is the world's leading manufacturer and exporter of fine bone china.
The textile and clothing industries have around 13,000 firms, comprising a few large multi-process companies and two of the world's largest firms – Coats Viyella and Courtaulds Textiles - as well as a large number of small and medium-sized firms. Britain's wool textile industry is one of the most important in the world, and the country is also one of the world's leading producers of woven carpets.
Annual output of the construction industry is around Ј50,000 million. Most construction work is done by private firms, 98 per cent of which employ fewer than 25 people. A vast range of products is used in the construction process, from glass and bricks to tiles and bathroom fittings. Sales of construction materials were worth about Ј30,000 million in 1994, with exports amounting to Ј3,000 million. The most important recent construction project has been the Channel Tunnel the largest single civil engineering project ever undertaken in Europe.
British companies are engaged in many major projects throughout the world and have been in the forefront of innovative methods of management contracting and construction management. British contractors are undertaking, or have recently completed, work in 134 overseas countries. In 1994 they won new international business valued at Ј3,800 million. Important international contracts signed in 1994-95 included various joint ventures connected with the new airport in Hong Kong, a power station in Indonesia and city development contracts in Leipzig and Halle in Germany. British engineering consultants are engaged in projects in 130 countries.
Services account for two-thirds of Britain's GDP and over three-quarters of employment. The number of employees in services rose from over 13 million in 1983 to 16.5 million by June 1995.
Britain is a major financial centre, housing some of the world's leading banking, insurance, securities, shipping, commodities, futures and other financial services and markets. The markets for financial and related services have grown and diversified greatly. The heart of the industry is the collection of markets and institutions in and around the 'Square Mile' in the City of London. 'The City' has:
• a banking sector accounting for about a fifth of total international bank lending, with a larger number of overseas banks than in any other financial centre;
• one of the world's biggest international insurance markets;
• one of the world's largest stock exchanges;
• the largest foreign exchange market in I lie world, with an average daily turnover of about $300,000 million;
• important markets for transactions in commodities; and
• a full range of legal, accountancy and management consultancy services, which contribute to London's strength as a financial centre.
Retailing and Wholesaling.
In June 1995 the retail and wholesale trades employed nearly 3.6 million people. During recent years the large multiple retailers have grown in size, reducing numbers of stores but increasing outlet size and diversifying their product ranges. Four of the ten largest food retailers in Western Europe are British. The biggest supermarket groups are Tesco, J. Sainsbury, Argyll (principally Safeway) and Asda. These accounted for 40 per cent of food and drink sold in 1994-95.
Many towns and cities have purpose-built shopping centres. One of the first regional
out-of-town shopping centres was the Metro Centre at Gateshead in Tyne and Wear, which is the largest of its kind in Europe.
Information technology has become increasingly central to distribution and retailing. Computers monitor stock levels and record sales figures through electronic point-of-sale (EPOS) systems which read a bar code printed on the retail product. Several major EFTPOS (electronic funds transfer at point of sale) systems, enabling customers to pay for purchases using debit cards that automatically transfer funds from their bank account, are well established. The number of EFTPOS terminals is growing rapidly.
Britain is the world's sixth leading tourist destination. Tourism contributes around Ј33,000 million a year to the economy and employs about 1.5 million people. In 1994 a record 21 million overseas visitors came to Britain and spent around Ј10,000 million. About 63 per cent of overseas visitors were from Europe and 17 per cent from North America.
The British Tourist Authority (BTA) promotes Britain overseas as a tourist destination. Tourist boards for England, Scotland, Wales and Northern Ireland encourage the development and promotion of tourism within Britain and work with the BTA overseas.
Other service industries include vehicle, vehicle parts and petrol retailing; hotels and catering; and a broad range of business services, such as computer services, advertising, market research and franchising .
Hotels and catering employ about 2.4 million people in Great Britain. There are 52,000 hotels in Great Britain, ranging from large businesses (such as Forte) to numerous guest houses and small hotels with fewer than 20 rooms. Britain's 100,000 restaurants offer cuisine from virtually every country in the world. Chinese, Indian, Italian and Greek restaurants are among the most popular. 'Fast food' restaurants, specialising in hamburgers, chicken, pizza and a variety of other foods, are becoming more and more widespread. About 77,000 public houses sell beer, wines, soft drinks and spirits to adults for consumption on the premises; most also provide hot and cold food.
Britain is one of the world's three leading countries for international conferences. London and Paris are the two most popular conference cities.
Britain is a major centre for creative advertising. Leading companies include Abbott Mead Vickers, BBDO,J. Walter Thompson, Leo Burnett , and OgiIvy and Mather Advertising. Spending on advertising totalled Ј10,200 million in 1994, of which 55 per cent was placed in the press and 28 per cent on television. Campaigns are planned by around 2,000 advertising agencies. The largest advertising expenditure is on food, household durables, cosmetics, office equipment, motor vehicles and financial services. The public relations industry has grown rapidly and is now the most developed in Europe.
Britain's economy is based primarily on private enterprise, with the private sector accounting for 79 per cent of output and 85 per cent of employment.
From 1981 to 1989 the British economy experienced eight years of sustained growth at an average annual rate of over 3 per cent. Subsequently, Britain, in common with other major industrialised nations, was severely affected by recession. However, the economy has been growing again since 1992. Growth has taken place across a broad front, with a major contribution coming from exports and, more recently, investment. The economic climate in 1995 was also characterised by a revitalised manufacturing sector, coupled with inflation at historically low levels, falling unemployment, low average earnings growth and increased business confidence.
Inflation has declined substantially since the start of the 1990s. The Retail Prices Index (RPI), which records the price of goods and services purchased by households in Britain, was 2.9 per cent higher in January 1996 than a year earlier. Underlying inflation - RPI excluding mortgage interest payments-was 2.8 per cent. It has been below 3 per cent for almost two years, the longest period since the early 1960s.
Gross domestic product (GDP) rose by 3.9 per cent in 1994. The Government forecasts that GDP growth will slow to a more 'sustainable' rate, coming down to 3.25 per cent in 1995 and 2.75 per cent in 1996.
Growth in manufacturing output per head in Britain in the 1980s was faster than in all other leading industrialised countries, increasing by an average of 4.6 per cent a year. In 1994 it grew by 4.8 per cent and productivity in the economy as a whole rose by 3.5 per cent.
Employment is recovering following the recession. Between June 1993 and June 1995 the workforce in employment grew by 381,000 to 25.7 million. The long-term trend has been for a fall in full-time employment and a growth in part-time employment. Self-employment is increasing again, following a decline during the recession. About 3.3 million people are self-employed, 19 per cent more than in 1985. Unemployment has dropped by over 770,000 since the end of 1992. The level of unemployment -7.9 per cent of the workforce (2.2 million people) in January 1996 - is below the EU average. The number of working days lost as a result of industrial disputes in 1994 was the lowest on record.
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