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The nature of the UK economy

 

The size of these sectors can either be measured by the percentage of Gross Domestic Product (GDP) they contribute, or by how many inputs they use, which can either be the amount of capital or the amount of labour employed. Of the two, labour is more commonly used for analysis, as there is obviously a lot of interest in the employment patterns of the workforce. When output is measured, it is usually measured at factor cost, as to use market prices would be to include the distorting effects of taxes and subsidies. .
             The primary sector as a whole in 1964 accounted for 5.8% of GDP. Although it declined over the next decade, reaching 4.2% of GDP in 1973, the discovery of North Sea oil caused to increase to 6.7%. By the recession of the early 1990s, though, it had plummeted to 3.9%, and by 1995 had increased only to 4.2%. When these figures are broken down, it is clear that the profits from the oil had dried up by 1990.
             The largest sectorial change has occurred in the secondary sector. In 1964 this accounted for 40.8% of the UK's GDP, but, despite rising slightly in 1969, plummeted to 28.2%. As will be discussed later, the decline of manufacturing is the part of this sector that has caused the most contention.
             As the percentage share of this sector has declined, the tertiary sector has seen the larges increase. Overall, it accounted for 53.8% of GDP in 1964, but by 1995 it was responsible for 67.6% of UK output. To express this another way, it contributes just under 2.5 times as much GDP than the secondary sector does, and twice as much GDP as the goods sector does in total. The sector as a whole has been increasing, although individual components (especially spending on social service and defence) have admittedly either dropped slightly or seen minor fluctuations.
             These structural changes can be seen in a different light if the employment figures are used, instead of the contribution to GDP. The percentage of people employed in the primary sector has plummeted from 5.


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