United Kingdom

Government revenues are derived from several main sources, including income taxes, corporate taxes, taxes on the sale of goods and services, and national insurance contributions. After World War II the government adopted individual income tax rates that were among the highest in Europe. During the last two decades of the 20th century, individual income tax rates dropped, and corporate tax rates increased slightly. A value-added tax, which levies a 20 percent tax on purchases, generates between one-tenth and one-fifth of government revenues.

During the 1980s the Thatcher government adopted policies that placed limits on the power and influence of trade unions and provided training for those entering the workforce or changing careers. The Labour government of the late 1990s retained many of Thatcher’s policies, but they abandoned the Conservative objective of unlimited tax reduction and instead sought to stabilize the overall burden of taxation at about 37 percent of GDP.

Just under half the total population is in the labour force, including a small but expanding proportion who are self-employed. About three-tenths of workers are members of a trade union, a share that dropped significantly with the adoption of legislation restricting trade union rights in the last two decades of the 20th century. Among the various influential trade organizations are the public-sector union UNISON and the general-services unions Unite and GMB. Although manufacturing once dominated employment, it now involves less than one-sixth of all workers. In contrast, the service sector employs more than two-thirds of employees, with financial services and distribution the two largest components.

Transportation and telecommunications

The United Kingdom, which is relatively small in area and has a fairly high population density, has undergone considerable change in its patterns of transport. The growth of automobile ownership (by the turn of the 21st century, nearly two-thirds of all households had one automobile, and some had two or more), the decline in the use of local buses, and the transfer of much internal freight from rail to road increased the importance of maintaining and developing road networks, particularly motorways (superhighways) and trunk roads. Intercity rail services have been improved, as have commuter services in major metropolitan areas. Similarly, air traffic has grown, particularly international flights. Although there has been a downward trend in shipping and sea travel, most foreign trade still moves by sea. However, the opening of the Channel Tunnel rail link between England and France in 1994 had a big impact on cross-Channel passenger and freight patterns. At peak periods the tunnel accommodates up to four passenger and four freight shuttletrains per hour in each direction. By the end of the decade, these trains carried about half of the car traffic and more than one-third of the coach and truck traffic on the Dover/Folkestone–Calais route—the principal artery linking Britain to mainland Europe. In addition, the tunnel accommodates through freight trains and high-speed passenger trains between London and Paris or Brussels. Substantial passenger and cargo traffic moves by sea between the ports of the United Kingdom, Ireland, and Europe. Oil and natural gas, each of which has a national bulk-distribution pipeline system, do not rely on the road and rail networks.

Investment in transportation has sometimes failed to meet rising demand—for example, the M25 motorway around London showed signs of overload soon after it was opened in 1986; there is overcrowding on commuter rail services, including London’s Underground; congested traffic moves at a snail’s pace in cities; and there is continuous pressure to build more motorways and airports to serve London.

During the 1980s British Telecom (BT) was privatized, and the government subsequently deregulated the country’s telecommunications sector. Although BT has continued to be the largest telecommunications company, several additional operators provide extensive service for cable, wireless, fibre-optic, and other telecommunications services. An independent regulatory agency, the Office of Communications (Ofcom), oversees the sector. Ulric M. Spencer Peter Kellner

Government and society

Constitutional framework

The United Kingdom is a constitutional monarchy and a parliamentary democracy. The country’s head of state is the reigning king or queen, and the head of government is the prime minister, who is the leader of the majority political party in the House of Commons.

Houses of Parliament (Westminster Palace) and Big Ben, London, from Westminster Bridge.Dennis Marsico/Encyclopædia Britannica, Inc.