The pound sterling, denoted by GBP, is the official unit of currency used in the United Kingdom. The sign for the pound is £ (or rarely, just "L"). Both symbols derive from libra , the Latin word for "pound".
The pound sterling is one of the world's most widely traded currencies, along with the United States dollar, the Japanese yen, and the euro. It is the highest valued of the major currency units.
The pound is subdivided into 100 pence, the singular of which is "penny." The symbol for the penny is "p."
Prior to decimalization in 1971, each pound was divided into 240 pence - although it was usually expressed as being divided into twenty shillings, with each shilling equal to twelve pence. After Decimal Day, the value of one penny was therefore different from its pre-decimalization value. For the first few years after 1971, the new type of penny was commonly referred to as a "new penny". Coins for denominations of ½p, 1p, 2p, 5p, 10p and 50p all bore the name "New Pence" until 1982, when the inscription changed to "One Penny" / "Two Pence" and so on.
Terminology
To avoid confusion between the unit of currency and the unit of weight, the pound is referred to more formally as the "pound sterling" or simply "sterling." Less formally, the slang term "quid" is also used in conversation.
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Political Structure
The United Kingdom of Great Britain is a constitutional monarchy, with executive power exercised by the government (drawn from Parliament) and headed by the Prime Minister. The United Kingdom is among the few countries in the world that does not have a codified constitution.
The Prime Minister is the head of government who appoints other Ministers from Parliament to form the Cabinet. Sovereignty is vested fully in the monarch, who is Head of State; however, His/Her Majesty's Government is answerable and accountable to the House of Commons under the British Constitution. The British government's system has been emulated globally; nations that follow this style of British parliamentarianism, with an executive drawn from and accountable to the legislature, are said to operate under the Westminster system of governance.
In the United Kingdom, the monarch has extensive powers in theory, but in actuality his or her role is mostly ceremonial. The monarch is an integral part of Parliament and theoretically gives Parliament the power to meet and create legislation. An Act of Parliament becomes a law officially when it has been signed by the Queen (referred to as being given "Royal Assent"); of note, however, is that no monarch has refused to assent to a bill that has been approved by Parliament since Queen Anne in 1708. Foreign policy and criminal justice are implemented in Her Majesty's name, but the monarch has no real control over either. The Queen also confers titles and honors, on the advice of the Prime Minister in most instances. Her Majesty has access to all Cabinet papers and is briefed weekly by the Prime Minister, usually on Tuesdays.
Parliament is the national legislature of the United Kingdom. It is the ultimate legislative authority in the United Kingdom, according to the doctrine of parliamentary sovereignty . It is bicameral , composed of the House of Commons and the House of Lords, whose unelected members are mostly appointed. The House of Commons is more powerful than the House of Lords, and may ultimately pass legislation that the Lords has rejected, by invoking the Parliament Act. The House of Commons has 646 members who are directly elected from single-member constituencies based on population. The House of Lords has 724 members: hereditary peers, life peers, and bishops of the Church of England. Historically, the House of Lords was composed of members of the Peerage, holding seats by nature of birthright, although now members are appointed for life. Furthermore, the House of Lords Act 1999 severely curtailed the number of hereditary peers who could sit in the upper House - only 92 out of several hundred retain the right, through being elected by their fellow peers or by holding the royal offices of Earl Marshal or Lord Great Chamberlain. The proposals to reform the House of Lords initially called for all hereditary peers to lose their voting rights, but a compromise was reached that allowed them to be phased out gradually.
By constitutional convention, Ministers are chosen largely from among members of the Commons with a small number chosen from the Lords. Ministers exercise both legislative powers and prerogative (deriving from royal prerogative ) powers. The Prime Minister is the leader of the party with the majority of seats in the House of Commons; he is formally appointed by the monarch.
The Palace of Westminster, on the banks of the River Thames in Westminster, London, is the home of the House of Commons and the House of Lords.
Prominent Figures
Queen: Queen Elizabeth II
Prime Minister & First Lord of the Treasury: Tony Blair
Deputy Prime Minister & First Secretary of State: John Prescott
Governor, Bank of England: Mervyn King
Ambassador to the US: David Manning , Sir
Permanent Representative to the UN, New York: Emyr Jones Parry, Sir
Key Economic Factors
Economic Overview: The United Kingdom, in essence a capitalist system, is the fourth largest economy in the world. In the last twenty years, the government has allocated large amounts of money towards privatization programs, which have decreased public ownership sectors throughout the country. Agriculture has always been a very important area in the UK's economy and reforms in this century have resulted in a highly efficient system, where approximately 60% of food needs are produced with only 1% of the labor force. The United Kingdom owns large coal, natural gas, and oil reserves, which together account for 10% of GDP. The largest percentage of the GDP is made up of the services sector, including banking, insurance and business services. Although the UK is the largest manufacturer of armaments, petroleum products, personal computers, televisions, and mobile phones, industry nonetheless continues to decline. Tourism has played a large role in the UK's economy. The UK has more than 24 million visitors every year, which has ranked it as the 6 th most famous tourist vacation spot. The UK is among the last of Western Europe's major countries that have not yet employed the use of the euro (the currency of the European Union). Annual GDP growth in the UK was at its lowest since 1993 because of weak gains in the services and production sectors. The services sector has always been very important for the UK's economy, and recent slowdowns have seriously impacted economic growth.
The GDP measures the total monetary value of all final goods and services produced in the country in a year. This number is of high importance because it indicates how the economy has grown, if at all, in the previous year.
As of mid-2005: The real GDP grew 1.7% in the last quarter, down from the 2.1% growth from the previous numbers. These percentage growth rates are at an all time low since 1993. The services sector, business and finance services increased .8%, government and other services increased .7%, distribution, hotels, and catering increased by only .5%, and transport, communications, and storage services stayed at the same levels as the previous quarter. The manufacturing sector, indicated by its .7% decline, was pushed into recession. (All figures as of 2005)
The Consumer Price Index is a measure of the average change in consumer prices over time in a fixed market basket of goods and services. This number is of importance because it indicates whether a country is in recession or not. It shows the relative amount of how much goods are worth. Studying the changes in these numbers can help to see how the appreciation or depreciation has affected the countries' economy.
As of mid-2005: Consumer prices increased 2.3% in July, up three-tenths of a point since the previous month. Rising transport, utilities, and service costs have contributed towards the increase in the consumer price index. Consumer price inflation was higher in July than the Bank of England had initially expected. Interest rates are holding steadily at 4.5%, and the UK's government is expecting above target inflation into the third quarter. Many believe that price growth is directly dependent upon the price of crude oil. As oil rises through past the psychological barrier of $60 a barrel, price growth and producer output prices may continue to rise.
Key Industries: Machine tools, electric power equipment, automation equipment, railroad equipment, shipbuilding, aircraft, motor vehicles and parts, electronics and communications equipment, metals, chemicals, coal, petroleum, paper and paper products, food processing, textiles, clothing, and other consumer goods.
Agricultural Products: Cereals, oilseed, potatoes, vegetables; cattle, sheep, poultry and fish.
Import Commodities: Manufactured goods, machinery, fuels and foodstuffs.
Export Commodities: Manufactured goods, fuels, chemicals, food, beverages and tobacco.
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