The United Kingdom has a mixed economy that is the fifth largest in the world in terms of market exchange rates and the sixth largest by purchasing power parity (PPP). It is considered the second largest economy in Europe after Germany's. Its GDP PPP per capita in 2007 is the 22nd highest in the world. The United Kingdom is one of the world's most globalised countries. The capital, London (see Economy of London), is a major financial centre of the world, in front of New York City, Hong Kong and Singapore according to a report compiled by the City of London. The British economy is made up (in descending order of size) of the economies of England, Scotland, Wales and Northern Ireland. The UK became a member state of the European Community, in 1973, and ratified the Maastricht Treaty making it a European Union state, at the inception of the EU in 1993.
In the 1980s, under the Government of Margaret Thatcher, most state-owned enterprises in the industrial and service sectors, which since the 1940s had been nationalised, were privatised. The British Government now owns very few industries or businesses - Royal Mail is one example. Following the end of World War II, despite a largely prosperous period in the 1950s and 1960s, the British economy recorded weaker growth than other European nations and by the 1970s was referred to as the "sick man of Europe". However, the 1980s saw a new economic boom and in recent years Britain has seen the longest period of sustained economic growth for more than 150 years, having grown in every quarter since 1992.
It is one of the strongest EU economies in terms of inflation, interest rates and unemployment, all of which remain relatively low. The United Kingdom, according to the International Monetary Fund, in 2007 had the ninth highest level of GDP per capita in the European Union in terms of purchasing power parity, after Luxembourg, Ireland, the Netherlands, Austria, Denmark, Sweden, Belgium and Finland. However, in common with the economies of other English-speaking countries, it has higher levels of income inequality than many European countries. During August 2008 the IMF has warned that the UK economic outlook has worsened due to a twin shock: financial turmoil as well as rising commodity prices. Both developments harm the UK more than most developed countries, as the UK obtains revenue from exporting financial services while recording deficits in finished goods and commodities, including food.
The UK has the world's third largest current account deficit, despite significant oil revenues. This is mainly the result of a large deficit in the trade in manufacture goods. During May 2008, the IMF advised the UK government to broaden the scope of fiscal policy to promote external balance. Although the UK's "labour productivity per person employed" has been progressing well over the last two decades and has overtaken productivity in the united Germany, it lags around 20% behind France's level, where workers have a 35-hour working week. The UK's "labour productivity per hour worked" is currently on a par with the average for the "old" EU (15 countries). The United Kingdom currently ranks 16th on the Human Development Index.
In October 2007, the IMF forecast British GDP to grow by 3.1% in 2007 and 2.3% in 2008. However, GDP growth slowed to zero in quarter 2 of 2008. As of September 2008, the OECD forecasts that the UK economy faces contraction for at least two quarters, possibly severe, placing its predicted performance last in the G7 of leading economies. It has also been argued recently that heavy government borrowing over the past cycle has led to a severe structural deficit, reminiscent of previous crises, which will inevitably exacerbate the situation and place the UK economy in an unfavourable position compared to its OECD partners as attempts are made to stimulate recovery, other OECD nations having allowed greater room for manoeuvre thanks to contrasting policies of relatively tighter fiscal control prior to the global downturn.
In 2007 UK exports were valued at £220bn.
Food and drink exports were valued at £9.7bn (2005)
UK total arms exports were valued at £7.1bn (2005)