Economy of the United Kingdom

The United Kingdom has a highly developedsocial market economy. In 2026, the United Kingdom is the fifth-largest national economy in the world measured by nominal gross domestic product (GDP), tenth-largest by purchasing power parity (PPP), and about 21st by nominal GDP per capita, constituting 3.38% of world GDP and 2.13% by purchasing power parity (PPP).

The United Kingdom has one of the most globalised economies and comprises England, Scotland, Wales and Northern Ireland. In 2022, the United Kingdom was the fifth-largest exporter of goods and services in the world and the fourth-largest importer. It also had the fourth-largest outwardforeign direct investment, and the fifteenth-largest inward foreign direct investment. In 2022, the United Kingdom's trade with the European Union accounted for 42% of the country's exports and 48% of its total imports. The United Kingdom has a highly efficient and strong social security system, which comprises roughly 24.5% of GDP.

The service sector dominates, contributing 82% of GDP; the financial services industry is particularly important, and London is the second-largest financial centre in the world. Edinburgh was ranked 17th in the world, and 6th in Europe for its financial services industry in 2021. The United Kingdom's technology sector has an enterprise value of US$1.2 trillion, with fintech, health technology, and semiconductors accounting for 48% of the value. The aerospace industry in the United Kingdom is the second-largest national aerospace industry. Its pharmaceutical industry plays an important role in the economy. Of the world's 500 largest companies, 20 are headquartered in the UK, with combined global revenues of US$1.45 trillion. The economy is boosted by North Sea oil and gas production; its proven reserves were estimated at 2.9 billion barrels in 2024, although it has been a net importer of oil since 2005. There are significant regional variations in prosperity, with South East England and North East Scotland being the richest areas per capita. The size of London's economy makes it the biggest city by GDP in Europe. In 2022, the UK spent around 2.8% of GDP on research and development.

In the 18th century, Britain was the first nation to industrialise. During the 19th century, through its expansive colonial empire and technological superiority, Britain had a preeminent role in the global economy, accounting for 9.1% of the world's GDP in 1870. The Second Industrial Revolution was also taking place rapidly in the United States and the German Empire; this presented an increasing economic challenge for the UK, leading into the 20th century. The cost of fighting both the First and Second World Wars further weakened the UK's relative position. During the Great Recession of 2008, the UK economy suffered a significant decline, followed by a period of weak growth and stagnation. Slow growth continued following UK's exit from the EU in 2020, which damaged longer-term growth.

Government involvement is primarily exercised by His Majesty's Treasury, headed by the Chancellor of the Exchequer, and the Department for Business and Trade. Since 1979, management of the economy has followed a broadly laissez-faire approach. The Bank of England is the UK's central bank, and since 1997 its Monetary Policy Committee has been responsible for setting interest rates, quantitative easing, and forward guidance.