Lying in northwestern Europe, the United Kingdom (UK) occupies the major portion of the British Isles. It includes the countries of England, Scotland, and Wales, the constitutionally distinct region of Northern Ireland, and several outlying islands. Its only land border is with the Republic of Ireland. The UK is separated from the European mainland by the English Channel and the North Sea. To the west lies the Atlantic Ocean. Most of the population live in towns and cities and, in England, is fairly well scattered. The most densely populated region is the southeast. Scotland is the wildest region, with the Highlands less populated today than in the 18th century. The UK joined the European Communities (EC – later the EU) in 1973, and most of its trade is now with its European partners. Membership of the UN Security Council also gives the UK a prominent role in international diplomacy.

Although a unified state since the act of union in 1707, the Scottish and Welsh nations remain recognizably distinct, government has recently become more devolved, and Scots also retain their own legal and educational systems.

Britain's ethnic minorities account for less than 5% of the total population; over 50% were born in Britain. Ethnic minority communities are generally concentrated in the inner cities, where they face problems of deprivation and social stress, and may also suffer from isolation, particularly among women. Although there is little support for overt racist politics, multiethnic recruitment has made little progress in key areas such as policing, and prejudices persist. The level of institutionalized racism was criticized by the UN in 2000.

Two-fifths of all births occur outside marriage, compared with 12% in 1980, but most of these are to cohabiting couples. Single-parent households account for one-fifth of all families with children under 18.

Strengths

World leader in financial services, pharmaceuticals, and defense industries. Strong multinationals. Precision engineering and high-tech industries, including telecommunications and biotechnology. Energy sector based on North Sea oil and gas production. Innovative in computer software development. Flexible working practices. Success in controlling inflationary tendencies.

Weaknesses

Decline of manufacturing sector since 1970s, particularly heavy industries, car manufacturing. Quick-return mentality of many investment decisions. Nonparticipation in euro threatens former status as EU's largest recipient of inward investment, and has prompted some major investors to close UK factories.

Profile

Manufacturing has been in long-term decline, particularly since the 1980s, when sectors such as financial services expanded rapidly. After sharp recession in 1991, revival was sluggish, but by the latter half of the 1990s growth was faster than in European competitors. Exporters remained concerned that sterling was overvalued. In 2000 the government received a �22 billion windfall from the sale of "third generation" mobile phone operators' licenses. In 2001 the US economic downturn and the collapse of the Internet "dot.com" boom brought back fears of recession. Interest rate cuts aimed to boost domestic demand. The rural economy was hit hard by a serious epidemic of foot-and-mouth disease in livestock in 2001.

The UK is a multiparty democracy. The monarch's power is largely ceremonial.

Profile

Margaret Thatcher's 1979 election victory ushered in almost 18 years of Conservative rule, and monetarist and privatization policies. The Labour Party won back power in 1997 as the Conservatives lost impetus and popularity. Tony Blair's "New Labour" government, occupying the political center, retained a massive majority in the June 2001 election. The low turnout, however, reflected a growing perception that it had become "out of touch." The Conservative Party has so far failed to build a credible challenge around pledges to reduce taxes and opposition to the euro.

Main Political Issues

Europe

Labour plans a referendum on joining the euro single currency. The Conservatives, in opposition, have become increasingly "Eurosceptic," considering that membership of the EU erodes national sovereignty.

Constitutional change

Major changes were made to the UK's system of government in the late 1990s. A separate Scottish Parliament, with substantial devolved powers, was approved by referendum and elected in May 1999, as was a new Welsh Assembly. The House of Lords was substantially changed by the abolition of voting rights for all but 75 hereditary peers, pending its complete overhaul; 15 "people's peers" were chosen in 2001. London gained greater autonomy in 2000 with the election both of its own assembly and of a mayor.

In Northern Ireland, the 1998 Good Friday agreement provided for a power-sharing framework to include unionists and Irish republicans. However, progress stalled over decommissioning the weapons of the paramilitaries. A joint executive formed in late 1999 has on occasion been suspended, and direct rule reimposed by the British government, with each side blaming the other for deadlock.

The economy

Fundamental alternatives on running the economy are no longer argued within mainstream politics. Labour no longer believes in renationalizing privatized industries, and is wary of increasing taxes. Its belief in using private finance and management within publicly owned services, such as health and education, has alienated some traditional Labour supporters, and the financial benefits of this policy are questioned by others.

The UK has the largest energy resources of any EU state, with substantial oil and gas reserves offshore on the continental shelf in the North Sea, and fresh fields in the north Atlantic. Drilled under difficult conditions, North Sea oil is of a high grade. Revenues from taxes on oil companies have been a major contributor to government finances, averaging around $12 billion a year.

Coal reserves are also sizable, but all but a handful of pits have closed, faced with cheap imports and falling demand. Privatization of the electricity industry, and pressure to cut pollution, encouraged the switch from coal to gas-fired power plants, prompting emergency government measures in the late 1990s and efforts to boost the role of "cleaner coal" technology.

The UK produces few other minerals in significant quantities. Cornwall's last tin mines teeter between closure and rescue. Some very small-scale gold mining survives in Wales and Scotland.

The National Health Service (NHS) offers universal free health care, but financial pressures have led to shortages, hospital closures, and sending patients abroad. The government has promised major investment and is keen to bring in private management. Private health care has grown rapidly since the 1970s.

Recent crises have focused on food safety, from salmonella poisoning to fatal brain disease attributed to eating beef from cattle with "mad cow" disease. Rates of obesity have tripled since 1980.

The state system is used by 94% of children. Others attend fee-paying private schools, including the traditional elite establishments confusingly known as public schools. There is now a new enthusiasm in government for "faith-based" schools.

From the 1960s onward, a two-tier state school system based on academic selection at age 11 was replaced to a great extent by mixed ability comprehensive schools. The 1988 education reforms introduced a national curriculum and weakened the role of local education authorities. The post-1997 Labour government has focused on testing, assessing teaching standards, and tackling "failing" schools. Public spending targets in 2002 promised to increase education expenditure significantly within four years, to 5.6% of GDP.

More colleges were given university status in the 1990s but established centers, particularly Oxford and Cambridge, are the most prestigious and best resourced.

Income inequality in the UK is greater than in 1884, when records first began. The UN in 2002 recorded 13.4% living below its "poverty" line, half of average income. Average wages for manufacturing workers in 2001 were $29,000 a year, only 4% of the average received by chief executives in large companies. Under Conservative governments in the 1980s and early 1990s, taxation for higher earners was cut, whereas the value of state benefits and pensions fell. Since the mid-1990s, economic growth has helped to bring unemployment down. Labour's 1997 election promises precluded raising income tax. This limited any scope for redistributive action, leaving antipoverty strategies dependent on better targeting of welfare benefits.

Great Britain began the 20th century as one of the world's most advanced economies, backed by a massive trading empire.

• 1906 Reformist Liberal government.
• 1914 World War I begins.
• 1918 Armistice signals end of war. Cost to Britain: 750,000 dead.
• 1921 Irish Free State agreed.
• 1926 General Strike.
• 1929 World stock market crash. Widespread unemployment.
• 1931 UK leaves gold standard and devalues pound.
• 1936 Edward VIII abdicates over marriage to Mrs. Simpson.
• 1938 Prime Minister Neville Chamberlain meets Hitler in Munich over Czech crisis, says threat of war with Germany averted.
• 1939 Germany invades Poland. UK declares war on Germany. Start of World War II.
• 1940 Winston Churchill prime minister. Battle of Britain.
• 1944 6 June, D-Day invasion of German-occupied France.
• 1945 End of World War II. War costs 330,000 British lives. Labour government comes to power on social welfare platform.
• 1946 Nationalization of Bank of England, railroads, coal, utilities.
• 1947 Indian independence.
• 1948 National Health Service established.
• 1949 Founder member of NATO.
• 1956 Suez crisis. UK intervenes in Canal Zone. Withdraws under US pressure.
• 1957 US nuclear missiles accepted on UK soil.
• 1961 UK application to EC rejected by French president de Gaulle.
• 1968 Abortion and homosexuality legalized.
• 1969 British troops sent into Northern Ireland.
• 1970 Conservatives in power under Edward Heath.
• 1973 Joins EC. Oil crisis. Industry on three-day week following strikes by power workers and miners.
• 1974 Labour government, under Harold Wilson, concedes miners' demands; strikes end. High inflation.
• 1975 Margaret Thatcher leader of Conservatives. Referendum ratifies EC membership. First North Sea oil pipeline in operation.
• 1979–1997 Conservative rule.
• 1980 Anti-US Cruise missiles protests. Rising unemployment. Inner-city riots.
• 1981 Privatization program begun.
• 1982 Argentina invades Falklands. Islands retaken by UK task force.
• 1983 Tax-cutting policies.
• 1986 Financial services market deregularized ("Big Bang").
• 1990 John Major Conservative leader. UK joins Gulf War.
• 1992 Conservatives win fourth consecutive election.
• 1994 Tony Blair Labour leader.
• 1996 Dunblane primary school massacre; tightening of gun control laws. Health crisis linking "mad cow" disease (BSE) with fatal variant Creutzfeldt-Jakob disease (vCJD).
• 1997 1 May, landslide election victory for Labour. August, Diana, Princess of Wales, killed in car crash in Paris. September, Scottish and Welsh referendums approve creation of own assemblies.
• 1998–1999 "Good Friday" agreement on political settlement in Northern Ireland, endorsed by referendum but held up by disputes over decommissioning weapons.
• 1999 March–June, involvement in NATO air war with Yugoslavia over Kosovo crisis. May, Scottish Parliament and Welsh Assembly elected, inaugurated. December, devolution to power-sharing executive in Northern Ireland.
• 2001 Foot-and-mouth epidemic and mass livestock culling. June, Labour wins second term in office with huge majority. October, military participation in US-led "war on terrorism" in Afghanistan.
• 2002 Queen Elizabeth II celebrates 50 years on the throne.