Invest in the United Kingdom

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The United Kingdom is seen as the most vibrant of the major European economies, with a GDP approximately equal to Germany’s (US$2.3 trillion in PPP terms) with a population of only 61 million, compared to Germany’s 80 million. It is the fifth-largest economy in the world.

Old Labour Gone Overboard: the Shift to Thatcher's Free Market

The United Kingdom was the most socialistic of the postwar economies. Postwar British politics was dominated by “Old Labour,” as the aggressively leftist faction of the Labour Party was later known. In 1976-79, however, Labour went drastically overboard. Top marginal tax rates were pushed over 90 percent, unions were empowered to an extent never before seen, and investment in the UK collapsed. The British people destroyed the Labour Party in 1979 and replaced it with the most radical free-marketeer of the time, Margaret Thatcher.

Thatcher’s tenure was characterized by her systematic demolition of the state-centric economic framework established by Old Labour, privatization of formerly state-owned utilities, privatization of the national pension system, shifting the tax burden away from the rich, and crushing the unions that formed Old Labour’s political backbone. Although Thatcher was deposed by a Conservative revolt in 1990, her stamp on the British economy remained long after the Conservatives were swept from power in 1997. Tony Blair, to considerable left-wing angst, did not alter the Thatcherite underpinnings of the UK’s economy.

Europe's International Financial Powerhouse

Today, London is one of the four prime nodes of the global financial industry (along with New York, Dubai and Asia, dominated by Tokyo, Hong Kong and Singapore). It easily outshines comparable European cities.

Like the United States, the UK has shifted from manufacturing to financial services. Tourism is also huge (the UK is the sixth most-visited nation in the world), and the UK also owns substantial oil and natural gas reserves, primarily in the North Sea.

Aggressive public-sector expansion, coincident with a still-robust private sector, have contributed to the UK’s very low level of unemployment. Because the UK is not as dependent upon exports, moreover, the stunning rate of appreciation of the British pound (GBP) has fewer long-term negative implications for Britain than the euro’s appreciation will for, say, Germany, which still has a powerful (high-end) manufacturing export sector.