Economic Systems of Europe
United Kingdom
The United Kingdom’s economy is a mixed economy. The government used to run many important industries, such as airlines, steel production, and energy. But in recent years, private businesses have taken over many of these areas. The government still runs some industries like health care.
Some businesses are not completely private. They are public-private partnerships. The government owns part of the business, while private companies own the rest. The United Kingdom leans toward a free-market economy. Most businesses are privately run.
Germany
Germany’s economy is also mixed. The government provides many social services. It also owns some of the means of production. At the same time, the government promotes free-market economies.
Germany has the largest economy in Europe. It is one of the world’s top producers of steel, coal, iron, cement, automobiles, and chemicals. Western Germany is more economically developed than eastern Germany. This is because when Germany used to be divided, West Germany’s economy, but East Germany had an inefficient (badly organized) command economy.
Russia
Since the end of communism, Russia’s economy has transitioned from a command economy to a mixed economy. The state still controlsmany parts of the economy. It controls energy production, transportation, and a number of other industries. But Russia’s government also allows free-market activity. Many of its businesses are privately owned.
For many years, the Soviet Union’s command economy hurt Russia. Much of its population is still very poor. Its industries are not as developed as those in Western Europe.
Economic Systems of Europe (Accelerated Reading)
United Kingdom
Despite the recent recession, the UK remains a global economic power with one of the largest economies in Europe. Most Britons enjoy a good standard of living, although there is a fairly large gap between the middle and working classes. Inflation and unemployment are low. Britain does most of its trading within the EU. Natural resources include oil, natural gas, iron ore, and salt. Crude oil (from the North Sea), manufactured goods, and consumer items make up major exports. The service sector is now more dominant than manufacturing, and London is one of the world's most important financial centers. When major British banks were hurt by the 2008 global financial crisis, the government responded with a US$64 billion rescue package, among other measures. The UK's currency is the pound sterling (GBP), usually just called the “pound.” British people remain divided over whether to adopt the European Union's monetary unit, the euro.
Germany
Germany is one of the top economic powers in the world and provides leadership and generous financial support to the EU. As a whole, the country has a high gross domestic product per capita; however, the east's economy is far weaker than the west's. East German prices typically are as high as those in the west, but salaries, rents, and overall living conditions remain lower. The east has made substantial progress in its shift toward a market economy; however, the region still relies heavily on subsidies (around US$80 billion a year) from the economically powerful western states. The government has undertaken huge projects to retrain workers and rebuild roads, railways, public transportation, and communications facilities. With investment from the west, the economy grew by an average of 8 percent from 1992 to 1995 but dropped to 2 percent in 1997 and actually shrank in 2003. More private investment is required to revitalize eastern industries and relieve the west of heavy tax burdens.
Inflation is low. Generous social benefits, rigid work rules, and high labor costs have been obstacles to reviving the economy and reestablishing the country's global competitiveness. Germany fell into recession in 2008 after responding to the global financial crisis with a US$675 billion rescue package and a guarantee on personal bank deposits. Germany is traditionally one of the world's largest exporters. Main exports include cars, televisions and other manufactured goods, steel, and aluminum. Construction, manufacturing, and service industries are important components of the domestic economy. In 2002, the euro replaced the Deutsche Mark as Germany's currency.
Russia
Russia's natural resources give it great potential for economic growth and development. Oil, natural gas, coal, diamonds, and precious metals are abundant. The agricultural sector is potentially strong. Heavy industry and oil have spurred economic growth in recent years, but they are also vulnerable to downturns in global prices. In 2008, falling oil prices and the global financial crisis hit the Russian economy hard. The government responded with a US$68 billion bank rescue package, among other measures. Russia's economy remains unstable for many additional reasons, including an inefficient distribution system, political uncertainties, poor infrastructure, high inflation, low tax-collection rates, low-quality production, organized crime, and corruption. Perhaps 40 percent of Russians live in poverty; exact numbers are difficult to determine because so much of the economy is underground. The currency is the ruble (RUR).