With the onset of the Global Financial Crisis in the late Summer of 2007, the United Kingdom was one of the first countries to experience financial panic after the United States. In September 2007, the bank Northern Rock became the UK's first bank to collapse in 150 years due to a bank run, as depositors reacted to the announcement that the bank would be seeking emergency liquidity support from the Bank of England by lining up outside their bank branches to withdraw money. The failure of Northern Rock was a bad omen for the UK economy and financial sector, as banks stopped lending to each other and to customers in what became known as the 'credit crunch'. Government bailouts, private bailouts By October 2008, many UK banks were facing a situation where if they did not receive external assistance, then they would have to default on their debts and likely have to declare bankruptcy. The UK's Labour government, led by Prime Minister Gordon Brown, announced that it would provide emergency funds to stabilize the banking system, leading to the part or full nationalization of some of Britain's largest financial firms. Specifically, Royal Bank of Scotland, Lloyds TSB, and HBOS received over 35 billion pounds in a government cash injection, while Barclays opted to seek investment from private investors in order to avoid nationalization, much of which came from the state of Qatar. The bailouts caused UK government debt ratios to almost double over the period of the crisis, while public trust in the financial system sank.
With the collapse of the U.S. housing market and the subsequent financial crisis on Wall Street in 2007 and 2008, economies across the globe began to enter into deep recessions. What had started out as a crisis centered on the United States quickly became global in nature, as it became apparent that not only had the economies of other advanced countries (grouped together as the G7) become intimately tied to the U.S. financial system, but that many of them had experienced housing and asset price bubbles similar to that in the U.S.. The United Kingdom had experienced a huge inflation of housing prices since the 1990s, while Eurozone members (such as Germany, France and Italy) had financial sectors which had become involved in reckless lending to economies on the periphery of the EU, such as Greece, Ireland and Portugal. Other countries, such as Japan, were hit heavily due their export-led growth models which suffered from the decline in international trade. Unemployment during the Great Recession As business and consumer confidence crashed, credit markets froze, and international trade contracted, the unemployment rate in the most advanced economies shot up. While four to five percent is generally considered to be a healthy unemployment rate, nearing full employment in the economy (when any remaining unemployment is not related to a lack of consumer demand), many of these countries experienced rates at least double that, with unemployment in the United States peaking at almost 10 percent in 2010. In large countries, unemployment rates of this level meant millions or tens of millions of people being out of work, which led to political pressures to stimulate economies and create jobs. By 2012, many of these countries were seeing declining unemployment rates, however, in France and Italy rates of joblessness continued to increase as the Euro crisis took hold. These countries suffered from having a monetary policy which was too tight for their economies (due to the ECB controlling interest rates) and fiscal policy which was constrained by EU debt rules. Left with the option of deregulating their labor markets and pursuing austerity policies, their unemployment rates remained over 10 percent well into the 2010s. Differences in labor markets The differences in unemployment rates at the peak of the crisis (2009-2010) reflect not only the differences in how economies were affected by the downturn, but also the differing labor market institutions and programs in the various countries. Countries with more 'liberalized' labor markets, such as the United States and United Kingdom experienced sharp jumps in their unemployment rate due to the ease at which employers can lay off workers in these countries. When the crisis subsided in these countries, however, their unemployment rates quickly began to drop below those of the other countries, due to their more dynamic labor markets which make it easier to hire workers when the economy is doing well. On the other hand, countries with more 'coordinated' labor market institutions, such as Germany and Japan, experiences lower rates of unemployment during the crisis, as programs such as short-time work, job sharing, and wage restraint agreements were used to keep workers in their jobs. While these countries are less likely to experience spikes in unemployment during crises, the highly regulated nature of their labor markets mean that they are slower to add jobs during periods of economic prosperity.
The United Kingdom's economy grew by 1.1 percent in 2024, after a growth rate of 0.4 percent in 2023, 4.8 percent in 2022, 8.6 percent in 2021, and a record 10.3 percent fall in 2020. During the provided time period, the biggest annual fall in gross domestic product before 2020 occurred in 2009, when the UK economy contracted by 4.6 percent at the height of the global financial crisis of the late 2000s. Before 2021, the year with the highest annual GDP growth rate was 1973, when the UK economy grew by 6.5 percent. UK economy growing but GDP per capita falling In 2022, the UK's GDP per capita amounted to approximately 37,371 pounds, with this falling to 37,028 pounds in 2023, and 36,977 pounds in 2024. While the UK economy as a whole grew during this time, the UK's population grew at a faster rate, resulting in the negative growth in GDP per capita. This suggests the UK economy's struggles with productivity are not only stagnating, but getting worse. The relatively poor economic performance of the UK in recent years has not gone unnoticed by the electorate, with the economy consistently seen as the most important issue for voters since 2022. Recent shocks to UK economy In the second quarter of 2020, the UK economy shrank by a record 20.3 percent at the height of the COVID-19 pandemic. Although there was a relatively swift economic recovery initially, the economy has struggled to grow much beyond its pre-pandemic size, and was only around 3.1 percent larger in December 2024, when compared with December 2019. Although the labor market has generally been quite resilient during this time, a long twenty-month period between 2021 and 2023 saw prices rise faster than wages, and inflation surge to a high of 11.1 percent in October 2022.
The gross domestic product of the United Kingdom was around 2.56 trillion British pounds, an increase when compared to the previous year, when UK GDP amounted to about 2.54 trillion pounds. The significant drop in GDP visible in 2020 was due to the COVID-19 pandemic, with the smaller declines in 2008 and 2009 because of the global financial crisis of the late 2000s. Low growth problem in the UK Despite growing by 0.9 percent in 2024, and 0.4 percent in 2023 the UK economy is not that much larger than it was before the COVID-19 pandemic. Since recovering from a huge fall in GDP in the second quarter of 2020, the UK economy has alternated between periods of contraction and low growth, with the UK even in a recession at the end of 2023. While economic growth picked up somewhat in 2024, GDP per capita is lower than it was in 2022, following two years of negative growth. UK's global share of GDP falling As of 2024, the UK had the sixth-largest economy in the world, behind the United States, China, Japan, Germany, and India. Among European nations, this meant that the UK currently has the second-largest economy in Europe, although the economy of France, Europe's third-largest economy, is of a similar size. The UK's global economic ranking will likely fall in the coming years, however, with the UK's share of global GDP expected to fall from 2.16 percent in 2025 to 2.02 percent by 2029.
This statistic shows the national debt of the United Kingdom from 2020 to 2024, with projections up until 2030. In 2024, the national debt in the United Kingdom was about 3.91 trillion U.S. dollars. Reduction of the national debt and recovery of the economy in the UK The debt of the United Kingdom, which amounted to around 1,600 billion pounds in 2014 - more than it has ever been - is projected to keep rising. Since the economic recession of 2007-08, economic growth in the United Kingdom has been slow, but it has been able to recover. In 2014, the United Kingdom recorded a 2.8 percent growth rate. Many believe that if the economy is stable, the government will reduce spending and not accrue any more debt, and it can indeed be seen that while government spending continues to increase, the gap between spending and revenue is projected to get smaller. If the government were to earn more than it spends, it could use the money left over to pay the national debt and start to reduce it. However, what is even more important is the size of the debt in relation to the size of the country's economy; if the debt grows slower than the economy, the debt to GDP ratio can still fall, despite a budget deficit. The ratio of government expenditure to GDP indicates that the economy is recovering at a faster rate than government expenditure, with the ratio decreasing significantly over the last decade and the national debt in relation to GDP being expected to decrease further as well - albeit slowly. This should help relieve concerns over the United Kingdom’s mounting debt, but for some debt reduction is just not fast enough.
In 2022/23 the median annual household disposable income in the United Kingdom amounted to approximately 31,817 British pounds. Between 1994/95 and 2007/08 the average household disposable income showed year-on-year increases, but after this point, income levels began to stagnate and even decline in some years. Although average household disposable resumed a steady growth pattern between 2012/13 and 2016/17, it has fluctuated in more recent years, and declined in the most recent two years. Economic shocks and disposable income The steady growth of disposable income from 1994 to 2008 reflected the generally healthy UK economy in that period. After the global financial crisis, however, the UK economy was plunged into a deep recession that is mirrored by a decline in disposable income. Although there was a period of recovery between 2013 and 2016, the UK economy has suffered a series of economic shocks since that point. The Brexit Referendum of 2016, and the subsequent economic and political fallout, was followed by the COVID-19 pandemic in 2020, and in more recent years by the Inflation Crisis and Ukraine War. Living costs putting UK households under pressure Between January and April 2022, the share of people reporting an increase in their living costs compared with the previous month rose from 66 percent to 91 percent. This corresponded with significant price increases at that time, with CPI inflation surging from 0.4 percent in February 2021 to a 41-year-high of 11.1 percent by October 2022. Although inflation did gradually start to decline in the following months, it wasn't until July 2023 that wages caught up with inflation. The surge in energy and food prices that caused this high inflation, was devastating for UK households, leading to the worst Cost of Living Crisis for decades.
The share of total exports from European Union member states which goes to other EU countries underwent a decline from its early 2000s high point during the global financial crisis, great recession and Eurozone crisis(2007-2012), before rebounding back to around 62 percent of total exports in the early 2020s. This share is a good indicator of the relative importance of intra-EU trade, that is, trade governed by the "four freedoms" of the European Single Market (freedom of movement for goods, services, capital, and labor), vis-a-vis international trade with partners outside of the European Union.
It is worth keeping in mind that the United Kingdom, a key trading partner of many European Union countries, left the EU in 2020, meaning that the country was added to the extra-EU share. The fact that this did not have a notable effect on the share of exports going to extra-EU countries points to the declining relative importance of the UK as a trade partner for the EU.
Not seeing a result you expected?
Learn how you can add new datasets to our index.
With the onset of the Global Financial Crisis in the late Summer of 2007, the United Kingdom was one of the first countries to experience financial panic after the United States. In September 2007, the bank Northern Rock became the UK's first bank to collapse in 150 years due to a bank run, as depositors reacted to the announcement that the bank would be seeking emergency liquidity support from the Bank of England by lining up outside their bank branches to withdraw money. The failure of Northern Rock was a bad omen for the UK economy and financial sector, as banks stopped lending to each other and to customers in what became known as the 'credit crunch'. Government bailouts, private bailouts By October 2008, many UK banks were facing a situation where if they did not receive external assistance, then they would have to default on their debts and likely have to declare bankruptcy. The UK's Labour government, led by Prime Minister Gordon Brown, announced that it would provide emergency funds to stabilize the banking system, leading to the part or full nationalization of some of Britain's largest financial firms. Specifically, Royal Bank of Scotland, Lloyds TSB, and HBOS received over 35 billion pounds in a government cash injection, while Barclays opted to seek investment from private investors in order to avoid nationalization, much of which came from the state of Qatar. The bailouts caused UK government debt ratios to almost double over the period of the crisis, while public trust in the financial system sank.